On January 1, 2019, ET Mags Inc. signed a 6-year non-cancelable lease for an alloy wheel molding injection press. The te

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On January 1, 2019, ET Mags Inc. signed a 6-year non-cancelable
lease for an alloy
wheel molding injection press. The terms of the lease called for ET
Mags to make
annual payments of $34,533.30 at the beginning of each year,
starting January 1,
2019.
The alloy wheel molding injection press has an estimated useful
life of 6 years and
a $10,000 unguaranteed residual value. The press reverts back to
the lessor at the
end of the lease term.
ET Mags uses the straight-line method of depreciation for all of
its plant assets
and has an incremental borrowing rate of 6%; the lessor’s implicit
rate is
unknown.
Required:
(a) Compute the present value of the minimum lease payments; round
to nearest
whole dollar.
(b) Prepare all necessary journal entries for ET Mags covering this
lease through
December 31, 2020; round your entries to nearest whole dollar.