Question

Elf Leasing purchased a machine for $600,000 and leased it to IGA, Inc. on January 1,...

Elf Leasing purchased a machine for $600,000 and leased it to IGA, Inc. on January 1, 2018.

Lease description:
Quarterly rental payments $31,101 at beginning of each period
Lease term 6 years (24 quarters)
No residual value; no BPO
Economic life of machine 6 years
Implicit interest rate and lessee’s incremental borrowing rate 8%
Fair value of asset $600,000


Required:
Prepare appropriate entries for both IGA and Elf Leasing from the beginning of the lease through the second rental payment on April 1, 2018. Amortization is recorded at the end of each fiscal year (December 31). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amounts.)

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