Peters Company leased a machine from Johnson Corporation on January 1, 2024. The machine has a fair value of $21,000,000. The lease agreement calls for three equal payments at the end of each year. The useful life of the machine was expected to be three years with no residual value. The appropriate interest rate for this lease is 8%.

Other information:

PV of an ordinary annuity at 8% for 3 periods: 2.57710

PV of an annuity due at 8% for 3 periods: 2.78326

Required:

Determine the amount of each lease payment.

Prepare the journal entry for Peters Company at the beginning of the lease.

Prepare the journal entry for the first lease payment (ignore amortization).

Prepare the journal entry for the second lease payment (ignore amortization).