Ayayai Incorporated leases a piece of equipment to Kingbird Corporation on January 1, 2020. The lease agreement called for annual rental payments of $4,683 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 6 years, a fair value of $24,100, a book value of $19,100, and both parties expect a residual value of $8,100 at the end of the lease term, though this amount is not guaranteed. Ayayai set the lease payments with the intent of earning a 5% return, and Kingbird is aware of this rate. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature.

Your answer is partially correct. Try again. Suppose Kingbird incurs initial direct costs of $700 related to the lease. Prepare the journal entries for 2020. ( titles are automatically indented when the amount is entered. Do not indent manually. Record jour the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/20 Right-of-Use Asset 18136 Lease Liability 17436 9 cash 700 (To record the lease) 1/1/20 Lease Liability 4683 Cash 4683 (To record lease payment) (12/31/20 Lease Expense 5441 4 Lease Liability 638 Right-of-Use Asset 4534 Click if you would like to Show Work for this question: Open Show Work