Assume that on December $31,2024,$ Kimberly$-$Clark Corp. signs a $10-$year, non$-$cancelable lease agreement to lease a storage

building from Wildhorse Storage Company. The following information pertains to this lease agreement.

The agreement requires equal rental payments of $$68,199$ beginning on December $31,2024.$

The fair value of the building on December $31,2024,$ is $$498,399.$

The building has an estimated economic life of $12$ years, a guaranteed residual value of $$9,000,$ and an expected residual

value of $$4,900.$ 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

entries before credit entries. Credit account titles are automatically 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 answers to $0$ decimal places e$.$g$.5,275.)$

Date

Account Titles and Explanation

Right$-$of$-$Use Asset

$[$

$($To record the lease$)$

$($To record the lease$)$

$($To record first lease payment$)$

$($To record amortization of the right$-$of$-$use asset$)$

Interest Expense

Debit

$68199$

$49,839$

$($To record interest expense$)$

$($To record amortization of the right$-$of$-$use asset$)$