6b

On January 1, 2020, Wildhorse Company contracts to lease equipment for 5 years, agreeing to make a payment of $151,860 at the beginning of each year, starting January 1,2020. The leased equipment is to be capitalized at $623,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Witdhorse's incremental borrowing rate is 6%, and the implicit rate in the lease is 11%, which is known by Wildhorse. Title to the equipment transfers to Wildhorse at the end of the lease. The asset has an estimated useful life of 5 years and no residual value. (b) Prepare the joumal entries that Wildhorse should record on January 1, 2020. (Credit account titles are outomatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answers to 0 decimal places, eg. 5,275.)