Crane plc leased machinery from Young Ltd

Crane plc leased machinery from Young Ltd. on January 1, 2022. The lease term was for 8 years, with equal annual rental payments of £ 5,800 at the beginning of each year. In addition, the lease provides an option to purchase the machinery at the end of the lease term for £ 1,500, which Crane is reasonably certain it will exercise, as it believes the fair value of the machinery will be at least £ 6,000. The machinery has a useful life of 10 years and a fair value of £ 38,000. The implicit rate of the lease is not known to Crane. Crane’s incremental borrowing rate is 9%.

Prepare Crane’s 2022 journal entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.)