Peters Company leased a machine from Johnson Corporation on January 1, 2018. The machine has a fair value of $16,000,000. The lease agreement calls for five equal payments at the end of each year. The useful life of the machine was expected to be five years with no residual value. The appropriate interest rate for this lease is 10%.

Other information:

PV of an ordinary annuity @10% for 5 periods: 3.79079

PV of an annuity due @10% for 5 periods: 4.16987

Required:

1.Determine the amount of each lease payment.

2. 3. & 4.Prepare the appropriate journal entry.