Magic Leasing Company leases a new machine to Zewit Manufacturing Corporation. The machine has a cost of $120,000 and a fair value of $142,000. Under the 3-year, noncancelable contract, Zewit will receive title to the machine at the end of the lease. The machine has a 3-year life and no residual value. The lease was signed January 1, 20x7. Magic expects to earn a 6% return on its investment, and this implicit rate is known by Zewit. The annual rentals are payable on each December 31, beginning December 31, 20x7. c. Prepare the journal entry at commencement of the lease for Magic.