LaSalle Leasing Company (lessor) agrees on January 1, 2019, to rent Rockwood Winery (lessee) the equipment that Rockwood requires to expand its production capacity to meet customers’ demands for its products. The lease agreement calls for five annual lease payments of $200,000 at the end of each year. Rockwood has determined that the present value of the lease payments, discounted at 15%, is $670,431. The leased equipment has an estimated useful life of five years and no residual value. Rockwood uses the straight-line method for depreciating similar equipment that it owns.

Required:

a. Prepare a lease amortization schedule for this lease for the lessee. 

b. Prepare the necessary journal entries for the first year of the lease for the lessee.