On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a operating lease. The lease requires three $17,735 lease payments (the first at the beginning of the lease and the rest at December 31 of Year 1 and Year 2). The present value of the three annual lease payments is $50,600, using a 5.240% interest rate. The lease payment schedule follows.

					Payments
Date	(A) Beginning Balance of Lease Liability				(B) Debit Interest on Lease Liability 5.240% (A)				+	(C) Debit Lease Liability (D) (B)				=	(D) Credit Cash Lease Payment				(E) Ending Balance of Lease Liability (A) (C)
Jan. 1, Year 1		$	50,600			$	0				$	17,735				$	17,735		$	32,865
Dec. 31, Year 1			32,865				1,722					16,013					17,735			16,852
Dec. 31, Year 2			16,852				883					16,852					17,735			0
						$	2,605				$	50,600				$	53,205

Required: 1. Prepare the January 1 journal entry at the start of the lease to record any asset or liability. 2. Prepare the January 1 journal entry to record the first $17,735 cash lease payment. 3. Prepare the December 31 journal entry to record amortization at the end of (a) Year 1, (b) Year 2, and (c) Year 3. 4. Prepare the December 31 journal entry to record the $17,735 cash lease payment at the end of (a) Year 1 and (b) Year 2.