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on january 1, 2024, wetick optometrists leased diagnostic equipment from southern corporation, which had purchased...

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Accounting

On January 1, 2024, Wetick Optometrists leased diagnostic equipment from Southern Corporation, which had purchased the equipment at a cost of $2,251,671. The lease agreement specifies six annual payments of $470,000 beginning January 1, 2024, the beginning of the lease, and on each December 31 thereafter through 2028. The six-year lease term ending December 31, 2029 (a year after the final payment), is equal to the estimated useful life of the equipment. The contract specifies that lease payments for each year will increase on the basis of the increase in the Consumer Price Index for the year just ended. Thus, the first payment will be $470,000, and the second and subsequent payments might be different. The CPI at the beginning of the lease is 120. Southern routinely acquires diagnostic equipment for lease to other firms. The interest rate in these financing arrangements is 10%. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: Prepare the appropriate journal entries for Wetick to record the lease at its beginning. Assuming the CPI is 126 at that time, prepare the appropriate journal entries related to the lease for Wetick at December 31, 2024

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