Crane Corporation enters into a $7-$year lease of equipment on December $31,2024,$ which requires $7$ annual payments of

$$39,500$ each, beginning December $31,2024.$ In addition, Crane guarantees the lessor a residual value of $$20,700$ at the end of the

lease. However, Crane believes it is probable that the expected residual value at the end of the lease term will be $$10,350.$ The

equipment has a useful life of $7$ years.

Prepare Cranes' December $31,2024,$ journal entries, assuming the implicit rate of the lease is $11\%$ and this is known to Crane. $($List all

debit entries before credit entries. 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. For calculation purposes, use $5$ decimal places as displayed in the

factor table provided and round final answers to $0$ decimal places e$.$g$.5,275.)$

Click here to view factor tables.

Date

Account Titles and Explanation

December $31,$

$2024$

Debit

Credit

$($To record the lease liability$)$

December $31,$

$2024$

$($To record lease payment$)$