Bridgeport Incorporated leases a piece of equipment to Metlock Corporation on January 1, 2020. The lease agreement called for annual rental payments of $4,762 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 $24,600, a book value of $19,600, and both parties expect a residual value of $8,350 at the end of the lease term, though this amount is not guaranteed. Bridgeport set the lease payments with the intent of earning a 5% return, and Metlock 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.

Prepare the lease amortization schedule(s) for Metlock for all 4 years of the lease.

Prepare the journal entries for Metlock for 2020 and 2021

*Suppose Metlock incurs initial direct costs of $750 related to the lease. Prepare the journal entries for 2020. (calculations 12/31/20 Journal Entry)