Assume that on December $31,2024.$ Kimherly $-$Clank corp signs a $10-$year, non$-$cancelable lease agreement to lease a storage building from Sandhill Storage Company. The following information pertains to this lease agreement.

The agreement requires equal rental payments of $$66,999$ beginning on December $31,2024.$

The fair value of the building on December $31,2024,$ is $$490,629.$

The building has an estimated economic life of $12$ years, a guaranteed residual value of $$11,000,$ and an expected residual value of $$8,100.$ Kimberly$-$Clark depreciates similar buildings on the straight$-$line method.

The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor.

Kimberly$-$Clark's incremental borrowing rate is $8\%$ per year. The lessor's implicit rate is not known by Kimberly$-$Clark.

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$($For calculation purposes, use $5$ decimal places as displayed in the factor table provided$)$

$(a)$

Your answer is partially correct.

Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years $2024,2025,$ and $2026.$ Kimberly$-$Clark's fiscal year$-$end is December $31($List all debit eritries befare credit entries. Credit account titles are dutomatically inderted when amount is entered. Do not indent manually. If no entry is required, select No Entry for the account tiles ond enter o for the amounts. Round answers to o decirnal places es$.5,275.)$

Date

Account Titles and Explanation

Debit

Credi

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