On January 1, 20x1, Lessee enters into a 6-year lease of equipment. Annual rental is P400, 000 payable at the beginning of each year. Lessee does not know the lessor's implicit interest rate. Lessee's incremental borrowing rate is 8%. Lessee provides a residual value guarantee and expects to pay P50, 000 on this guarantee. The remaining useful life of the underlying asset is 8 years. Lessee uses the straight line method of depreciation.

Requirements:

a. Prepare the amortization table for the lease liability.

b. Provide the journal entries on the following dates: January 1, 20x1, December 31, 20x1 and

January 1, 20x2