Bramble Corporation leased equipment to Marin, Inc. on January 1, 2020. The lease agreement called for annual rental payments of $1,103 at the beginning of each year of the 3-year lease. The equipment has an economic useful life of 7 years, a fair value of $7,300, a book value of $5,300, and Bramble expects a residual value of $4,800 at the end of the lease term. Bramble set the lease payments with the intent of earning a 5% return, though Marin is unaware of the rate implicit in the lease and has an incremental borrowing rate of 7%. 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.

Question:

1.Prepare the entries for Bramble for 2020.

- Your answer is partially correct. Prepare the entries for Bramble for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Debit Credit Date 1/1/20 Account Titles and Explanation | Lease Receivable 7,300 Sales Revenue 7,300 12/31/20 | Cash 1,103 Lease Receivable 1.103 (To record the recognition of the revenue) Depreciation Expense 12/31/20 1 757|| Accumulated Depreciation-Equipment (To record depreciation expense on the leased equipment)