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On January 1, 2020, AAA signed a five-year noncancelable lease for equipment. The terms of...

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Accounting

On January 1, 2020, AAA signed a five-year noncancelable lease for equipment. The terms of the lease called for AAA to make annual payments of $200,000 at the beginning of each year for five years with title passing to AAA at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. The effective interest rate was 10%. Prepare adjusting journal entries AAA has to report regarding this lease in 2021.

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