Cullumber Corporation agrees on January $1,2025,$ to lease equipment from Ivanhoe, Inc. for $3$ years. The lease calls for annual lease

payments of $$21,000$ at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and is

not a specialized asset. In addition, the economic 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.

Prepare Cullumber' journal entries on January $1,2025($commencement of the operating lease$),$ and on December $31,2025.$ Assume

the implicit rate used by the lessor is $5\%,$ and this is known to Cullumber. $($List all debit entries before credit entries. Credit account titles are

automatically indented when the amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and

enter $O$ for the amounts. For calculation purposes, use $5$ decimal places as displayed in the factor table provided and round final answers to $"$O$"$

decimal places, eg$.5,275.$ Record journal entries in the order presented in the problem.$)$

Click here to view factor tables.

Date

Account Titles and Explanation

Debit

Credit

Right$-$of$-$Use Asset

$($To record lease liability$)$

Lease Liability

$($To record lease payment$)$

Lease Liability