Chance Enterprises leased equipment from Third Bank Leasing on January

Chance Enterprises leased equipment from Third Bank Leasing on January 1, 2018. Chance purchased the equipment at a cost of $1,000,000. Chance elected the short-term lease option. Appropriate adjusting entries are made annually.

Related Information:

Lease term ………………………………………… 1 year (4 quarterly periods)

Quarterly lease payments ….. $40,000 at Jan. 1, 2018, and at Mar. 31, June 30,

……………………………………………………………………. and Sept. 30

Economic life of asset ………………………………………………… 5 years

Interest rate charged by the lessor ………………………………………… 8%

Required:

Prepare appropriate entries for Chance from the beginning of the lease through December 31, 2018?

Chance Enterprises leased equipment from Third Bank Leasing on January