The Man Po Automobile Company leases automobiles under the following terms.

A three-year lease agreement is signed on 1 May 2015. At the end of the lease term, the asset will be returned to the lessor.

The lessor receives annual rental of $4,000 in advance.

The guaranteed residual value is $5,000. The expected residual value is $1,500 at the end of lease term.

The price of the automobile is $14,500.

The implicit interest rate (used by the lessor) is 12%, which is known to the lessee, and the lessees incremental borrowing rate is 14%.

The lessee depreciates its automobiles on a straight-line basis.

The useful life of the automobile is 5 years.

1st payment 1 May 2015 and subsequent payments on 30 Apr each year (reporting date)

Required:

Prepare the entries on the lessees books for the above lease transactions in the year of 2015, 2016, 2017 and 2018.