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Assume that IBM $($USA$)$ leased equipment that was carried at a cost of $170,000$ to Sheridan plc$.$ The term of the lease is $6$ years beginning December $31,2021,$ with equal rental payments of $30,044$ beginning December $31,2021.$ The fair value of the equipment at commencement of the lease is $156,600.$ The equipment has a useful life of $6$ years with no residual value. The lease has an implicit interest rate of $6\%,$ no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable.

Prepare IBM's December $31,2021,$ journal entries at commencement of the lease. $($Credit account titles are outomatically indented when amount is entered. Do not indent manually. For calculation purposes, use $5$ decimal places as displayed in the factor table provided and round final answers to $0$ decimal places e$.$g$.5,275.)$

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Date Account Titles and Explanation

December

$31,2021$

$($To record the lease$)$

December

$31,2021$

$($Ta record receipt of lease payment$)$

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