To raise operating funds, Signal Aviation sold an airplane on January 1, 2018, to a finance company for $910,000. Signal immediately leased the plane back for a 12-year period, at which time ownership of the airplane will transfer to Signal. The airplane has a fair value of $940,000. Its cost and its book value were $670,000. Its useful life is estimated to be 14 years. The lease requires Signal to make payments of $121,413 to the finance company each January 1. Signal depreciates assets on a straight-line basis. The lease has an implicit rate of 10%. Required: 1.&2. Prepare the appropriate entries for Signal on January 1, 2018 and December 31, 2018, to record the transaction and necessary adjustments.

1) Jan 01 2018- Record the cash received on sale by Signal Aviation.

2) Jan 01 2018 - Record the beginning of the lease by Signal Aviation.

3) Dec 31 2018 - Record accrued interest.

4) Dec 31 2018 Record the depreciation expense.