Response to the following problem:
Day Corp. entered into a finance lease agreement with Night Leasing Ltd. on January 1, 2016. Day Corp. agreed to pay Night annual payments of $24,154 on December 31 for the next three years to lease a vehicle with a fair value of $80,000. The interest rate implicit in the lease agreement was 8%.
Required:
1. Prepare the journal entries to record the assumption of the lease on January 1, 2016.
2. Prepare the lease repayment schedule.
3. Prepare the partial balance sheet of Day Corp. at December 31, 2016. Assume the first lease payment has been made.
Provide descriptions for journal entries. General ledger account numbers are not necessary.