Southern Edison Company Leased Equipment from Hi-Tech Leasing on January

Southern Edison Company leased equipment from Hi-Tech Leasing on January 1, 2018.
Other information:
$\begin{array}{ll}\text { Lease term } & 3 \text { years } \\\text { Annual payments } & \$ 40,000 \text { on January } 1 \text { each year }\\\text { Life of asset } & 3 \text { years } \\\text { Implicit interest rate } & 8 \% \\\text { PV, annuity due, } 3 \text { periods, } 8 \% & 2.7833 \\\text { PV, ordinary annuity, } 3 \text { periods, } 8 \% & 2.5771\end{array}$
There is no expected residual value.
Required: Prepare appropriate journal entries for Southern Edison for 2018 and 2019. Assume straight-line amortization and a December 31 year-end. Round your answers to the nearest whole dollar amounts.

Correct Answer:

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January 1, 2018:
Right-of-use asset 111,...

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