Ramos Corporation has leased a piece of equipment that has a useful life of twelve years. The terms LO 11 Recording Lease Obligations of the lease are 43,000 per year for twelve years. Ramos currently is able to borrow money at a longterm interest rate of 15 per cent. The value of the lease is 233,103 .

1. Prepare the journal entry to record the lease agreement.

2. Prepare the entry to record depreciation of the equipment for the first year using the straightline method.

3. Prepare the entries to record the lease payments for the first two years. LO 11 Instalment Notes Payable: