1. Tempo Industries is an 80%-owned subsidiary of Dalie Inc. On January 1, 2017, Dalie leased an asset to Tempo and the following journal entries were made:

Tempo
Assets Under Capital Lease	21,561
Cash		5,000
Obligations Under Capital Lease		16,561
Dalie
Minimum Lease Payments Receivable	20,000
Cash	5,000
Unearned Interest Income		3,439
Asset (cost of asset leased)		18,000
Sales Profit on Leases		3,561

The terms of the lease agreement require Tempo to make five payments of $5,000 each at the beginning of each year. The implicit interest rate used by both Dalie and Tempo is 8%.

Required:

Prepare the eliminations and adjustments required by the intercompany lease on the partial worksheet below of December 31, 2017. Also write out the journal entries with explanations.