Sax Company signs a lease agreement dated January 1, 2013, that provides for it to lease computers from Appleton Company beginning January 1, 2013. The lease terms, provisions, and related events are as follows: The lease term is 5 years. The lease is noncancelable and requires equal rental payments to be made at the end of each year. The computers have an estimated life of 5 years, a fair value of $300,000, and a zero estimated residual value. Sax agrees to pay all executory costs. The lease contains no renewal or bargain purchase option. The annual payment is set by Appleton at $83,222.92 to earn a rate of return of 12% on its net investment. Sax is aware of this rate, which is equal to its borrowing rate. Sax uses the straight-line method to record depreciation on similar equipment.

Prepare journal entries for Sax for the years 2013 and 2014. If required, round your answers to the nearest cent. For compound entries, if an amount box does not require an entry, leave it blank

Jan 1, 2013

Leased Equipment 300,000

Capital Lease Obligation 300,000

Dec 31

Capital Lease Obligation 47,222.92

Interest Expense 36,000

Cash 83,222.92

Depreciation Expense: Leased Equipment ?

Accumulated Depreciation: Leased Equipment ?

Dec 31, 2014

Capital Lease Obligation ?

Interest Expense ?

Cash 83,222.92

Depreciation Expense: Leased Equipment ?

Accumulated Depreciation: Leased Equipment ?