Blossom Steel Company, as lessee, signed a lease agreement for equipment for $5$ years, beginning December $31,2025.$ Annual rental

payments of $$41,000$ are to be made at the beginning of each lease year $($December $31).$ The interest rate used by the lessor in setting

the payment schedule is $4\%$; Blossom's incremental borrowing rate is $6\%.$ Blossom is unaware of the rate being used by the lessor. At

the end of the lease, Blossom has the option to buy the equipment for $$5,000,$ considerably below its estimated fair value at that time.

The equipment has an estimated useful life of $7$ years, with no salvage value. Blossom uses the straight$-$line method of depreciation on

similar owned equipment.

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Your answer is partially correct.

Prepare the journal entries, that Blossom should record on December $31,2025.($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 present value factor calculations to $5$ decimal places, e$.$g$.1\mathrm{.}25124$ and the final answers to $0$ decimal places, e$.$g$.58,971.$ List all

debit entries before credit entries.$)$

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