On January 1, 2024, Winn Heat Transfer leased office space under a three-year operating lease agreement. The

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On January 1, 2024, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement specified three annual lease payments of $80,000 each, beginning December 31, 2024, and on each December 31 through 2026. The lessor, HVAC Leasing, calculates lease payments based on an annual interest rate of 5%. Winn also paid a $100,000 advance payment at the beginning of the lease. With permission of the owner, Winn made structural modifications to the building before occupying the space at a cost of $180,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value.


Required:
Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2026.
Winn’s fiscal year is the calendar year.

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