Dennis Corporation entered into a long-term lease for a piece of equipment. The lease term calls for an annual payment of $2,000 for six years, which approximates the useful life of the equipment. Assume a discount factor of 16 percent. (Note: Present value of a single sum factor at six years and 16% is 0.410; present value of an annuity factor at six years and 16% is 3.685.) Round answers to the nearest dollar.
a. Prepare the entry without explanation to record the leased equipment.
b. Prepare the entry without explanation to record annual depreciation, assuming the straight-line method and no residual value.
c. Prepare the entry without explanation to record the first annual payment of $2,000, after the company has had the equipment for one year.
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