Question: Maris Co. purchased a machine on January 1, 2021, for $2,500,000 for the express purpose of leasing it. The machine is expected to have a five-year life, with no salvage value, and be depreciated on a straight-line monthly basis. On January 1, 2021, Maris leased the machine to Dunbar Company for $750,000 a year for a four-year period with an implicit rate of 6%. Payments are due to Maris on January 1 of each year starting in 2021. This is an operating lease from the lessee perspective.
a. Create the journal entries for the lessee, Dunbar, for January 1, 2021
b. Create the journal entries for the lessee, Dunbar, for December 31, 2021.
*Note: you do not need to create the amortization tables.