Assume that IBM leased equipment that was carried at a cost of $110,000 to Sunland Company. The term of the lease is 5 years December 31, 2019, with equal rental payments of $30,044 beginning December 31, 2019. The fair value of the equipment at commencement of the lease is $131,809. The equipment has a useful life of 5 years with no salvage value. The lease has an implicit interest rate of 7%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Prepare IBMs December 31, 2019, journal entries at commencement of the lease.

Debit Credit Date Account Titles and Explanation December 31, 2019 (To record the lease) December 31, 2019 (To record receipt of lease payment)