Question: Logan Electronics signed a lease to use a machine for five years. The annual lease payment is $14,200 payable at the end of each year.

Logan Electronics signed a lease to use a machine for five years. The annual lease payment is $14,200 payable at the end of each year.

1. Record the lease, assuming that the lease should be accounted for as a capital lease and the applicable interest rate is 12%. (Round to the nearest dollar.)

2. For the initial year, record the annual lease payment.

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