Answer:
a.
                                                                        Debit   Credit
December 31, 2017 
Lease Equipment Under Capital Leases    $166,794  
                                                       Lease Liability    $166,794
December 31, 2017/January 1, 2018	
Lease Liability                                        $40,000  
                                                          Cash             $40,000
b.                                           Debit               Credit
December 31, 2018
Depreciation Expense  $23,828  
           Accumulated Depreciation      $23,828
December 31, 2018/January 1, 2019
Interest Expense           $12,679  
Lease Liability          $27,321  
                            Cash                     $40,000
c.                                             Debit     Credit
December 31, 2019	
Depreciation Expense        $23,828  
   Accumulated Depreciation  $23,828
December 31, 2019/January 1, 2020
Interest Expense                    $9,947  
Lease Liability                	$30,053  
                 Cash                         $40,000
d. Balance Sheet
December 31,2019
Property Plant and Equipment                             Current Liabilities  
Leased Equipment Under Capital Leases $166,794	Lease Liability $33,058
Less Accumulated Depreciation	$47,656  
                                                         $119,138                Long Term  
                                                                                       Lease Liability	$36,362
Explanation:
a. The journal entries, that should be recorded on January 1, and December 31, 2017, by Steel would be as follows:
                                                                        Debit   Credit
December 31, 2017 
Lease Equipment Under Capital Leases    $166,794  
                                                       Lease Liability    $166,794
December 31, 2017/January 1, 2018	
Lease Liability                                        $40,000  
                                                          Cash             $40,000
Lease Equipment Under Capital Leases=(40,000*PVIFA(10%,Years = 40,000*4.16986))= $166,794  
b. The journal entries, that should be recorded on January 1 and December 31, 2018, by Steel would be as follows:
                                           Debit               Credit
December 31, 2018
Depreciation Expense  $23,828  
           Accumulated Depreciation      $23,828
December 31, 2018/January 1, 2019
Interest Expense           $12,679  
Lease Liability          $27,321  
                            Cash                     $40,000
Depreciation Expense= (166,794/7)=$23,828
Interest Expense [(166,794 - 40,000)*10%]=$12,679  
Lease Liability=(40,000 - 12,679)=$27,321
c. The journal entries, that should be recorded on January 1, and December 31, 2019, by Steel would be as follows:
                                             Debit     Credit
December 31, 2019	
Depreciation Expense        $23,828  
   Accumulated Depreciation  $23,828
December 31, 2019/January 1, 2020
Interest Expense                    $9,947  
Lease Liability                	$30,053  
                 Cash                         $40,000
d. The amounts that would appear on Steel's December 31, 2019, balance sheet relative to the lease arrangement would be as follows:
Balance Sheet
December 31,2019
Property Plant and Equipment                             Current Liabilities  
Leased Equipment Under Capital Leases $166,794	Lease Liability $33,058
Less Accumulated Depreciation	$47,656  
                                                         $119,138                Long Term  
                                                                                       Lease Liability	$36,362