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On January 1, 2007, Jamona Corp. signed a five year non-cancelabe lease for a machine.

On January 1, 2007, Jamona Corp. signed a five year non-cancelabe lease for a machine. The terms of the lease called for Jamona to make annual payments of $8,668 at the beginning of each year, starting January 1, 2007. The machine has an estimated life of six years and a $5,000 un-guaranteed residual value. The machine reverts to the lessor at the end of the lease term. Jamona uses the straight-line method of depreciation for all of its plant assets. Jamona's incremental borrowing rate is 10%, and the lessors implicit rate is unknown. Prepar journal entries

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