On January 1, 2018, McCaffrey Inc

On January 1, 2018, McCaffrey Inc. leased office space under a three-year operating lease agreement. The arrangement specified three annual rent payments of $320,000 each, beginning December 31, 2018, and at each December 31 through 2020. The lessor, Lowell Leasing, routinely finances equipment for other firms at an annual interest rate of 5%. McCaffrey also paid a $400,000 advance payment at the beginning of the lease in addition to the first $320,000 rent payment. With permission of the owner, McCaffrey made structural modifications to the building before occupying the space at a cost of $720,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value.
Required:
Prepare the appropriate journal entries for McCaffrey Inc. from the beginning of the lease through the end of 2018. McCaffrey's fiscal year is the calendar year. Round your answers to the nearest whole dollar amounts.

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Beginning of the Lease (January 1, 2018)...

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