Presented below are two independent situations.
1. Sunny Isles Car Rental leased a car to Emmaus Company for one year. Terms of the operating lease agreement call for monthly payments of $500.
2. On January 1, 2012, Wruck Inc. entered into an agreement to lease 20 computers from Braskich Electronics. The terms of the lease agreement require three annual rental payments of $30,000 (including 10% interest) beginning December 31, 2012. The present value of the three rental payments is $74,606. Wruck considers this a capital lease.
(a) Prepare the appropriate journal entry to be made by Emmaus Company for the first lease payment.
(b) Prepare the journal entry to record the lease agreement on the books of Wruck Inc. on January 1, 2012.