On January 2, 2013, Gold Star Leasing Company leases equipment to Brick Co. with 5 equal annual payments of $80,000 each, payable beginning December 31, 2013. Brick Co. agrees to guarantee the $50,000 residual value of the asset at the end of the lease term. Bricks incremental borrowing rate is 10%, however it knows that Gold Stars implicit interest rate is 8%. What journal entry would Gold Star make at January 2, 2013 assuming this is a directfinancing lease?

PV Annuity Due PV Ordinary Annuity PV Single Sum

8%, 5 periods 4.31213 3.99271 .68508

10%, 5 periods 4.16986 3.79079 .62092