BE21.15 (LO 3) LeBron James (LBJ) Corporation agrees on January 1, 2020, to lease equipment from Cavaliers, Inc. for 3 years. The lease calls for annual lease payments of $23,000 at the beginning of each year. The lease does not transfer ownership, nor does it contain a bargain purchase option, and is not a specialized asset. In addition, the useful life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment.

Assume the implicit rate used by the lessor is unknown, and LBJ's incremental borrowing rate is 6%.

PLEASE PREPARE ALL JOURNAL ENTRIES FROM BEGINNING TO END. PLEASE PREPARE FOR OPERATING AND FINANCE LEASE. THANK YOU!