Lance Corporation, a Public Corporation, Entered into the Following Transactions

Essay

Lance Corporation, a public corporation, entered into the following transactions:
1. On January 1, 2021, Gagne Car Rental leased a car to Lance Corporation for one year. Terms of the operating lease call for monthly payments of $ 550.
2. On January 1, 2021, Lance Corporation entered into an agreement to lease 20 machines with a fair market value of $ 160,000 from Wells Corporation. The terms of the lease agreement require an initial payment of $ 50,000 and then three annual rental payments of $ 60,000 beginning on December 31, 2021. The present value of the three rental payments is $ 149,211.
Instructions
a) Identify each lease as either operating or finance.
b) Prepare the appropriate journal entries to be made by Lance Corporation on January 1 related to the lease transactions.