On June 1, John Consulting signed a lease on electronic office equipment for three years. At the end of the lease John has the option to purchase the equipment for $1. Lease payments are to be $1,644.27 per month with payment due the 1^st of the month. The implied interest rate is 12% and the present value of the lease payments is $50,000. As part of the lease term John will be billed an additional $300 per month for a maintenance contract. Give the journal entries related to the lease for June 1 and July 1. (The 1^st payment will be June 1. Depreciation will be recorded at year-end only.)

Assuming straight line and no salvage value and a 4-year useful life, what is the depreciation expense on the leased equipment at December 31?