Create T-Accounts to record transactions,

On January 1 ABC issued $26,000 of 4% bonds dated January 1. Interest is payable seminannually on June 30 and December 31. The bonds mature in three years. The market yield for bonds is 6%.

On January 1 the company leased equipment that had an original cost of $775. The lease agreement specifics 6 annual payments of $162 beginning Jan 1 2019, the beginning of the lease and at each December 31 from 2019 through 2023. The six-year lease term ending December 31, 2024 is equal to the estimated useful life of the equipment. The implicit interest rate is 10%.