Required:
1. Repeat requirement 2 of P12–3. Assume that the lease payments are due at the beginning rather than at the end of the year. In this case, the first $277,409.44 payment would be made on January 1, 2014. Round the amount of the initial lease liability at January 1, 2014, to the nearest dollar. Round all amounts in the amortization table to the nearest cent.
2. Prepare the journal entry to record the lease as a capital lease on January 1, 2014. Also prepare the lessee’s adjusting entries for December 31, 2014 and 2015, as well as the entries to record the lease payments on January 1, 2015 and 2016, and the leased asset’s depreciation in 2014 and 2015.