Recording Entries for Short-Term Leases

On January 1, Baker Inc. enters into an operating lease of equipment for one year for $800 per month commencing on January 1. The equipment cost $160,000 and has a useful life of 10 years. Assuming that Baker Inc. elects to account for the lease under the short-term lease option, prepare Bakers monthly payment entry assuming payments are made at the end of each month.

JOURNAL ENTRY