The Company entered into two lease agreements during the year:

The company entered into a lease agreement for the use of $200,000 high-speed assembly line at its main production facility with General Capital. The ten-year lease (January 2,2016 - January 1, 2026) requires annual payments of $28,734 beginning on January 2, 2016.The lease doesn't contain a bargain purchase option or transfer title at the end of the lease term, but does include a guaranteed residual value of $15,000. Ramona has recorded January 1, 2016 the lease payment as follows:

Lease Exp. $28,734

Cash 28,734

The company estimated the useful life of the assembly line to be twelve years. The Company is unaware of General Capital's implicit interest rate and used a 10 percent interest rate in its lease analysis.

1. A five-year lease (April 1, 2016-March 31,2021) for the use of a building. The lease requires annual payments of $45,000 starting on April 1, 2016. The lease doesn't contain a bargain purchase option or transfer title at the end of the lease term, but includes an unguaranteed residual value of $60,000 at the end of the lease. The interest rate implicit in the lease is 12% which approximates The Company's incremental borrowing rate. The fair value of the building on April 1, 2016 was $213,200. The expected economic life of the building is 30 years. Ramona recorded the lease payment as follows:

Lease Exp $45,000

Cash 45,000

Determine and correct, if necessary. lease expense for 2016. Include all the calculation.