E$21\mathrm{.}1($LO $1,4)($Lessee Entries; Finance Lease with No Residual Value$)$ DU Journeys enters

into an agreement with Traveler Inc. to lease a car on December $31,2019.$ The following information

relates to this agreement.

The term of the non$-$cancelable lease is $3$ years with no renewal or bargain purchase option. The

remaining economic life of the car is $3$ years, and it is expected to have no residual value at the end

of the lease term.

The fair value of the car was $$15,000$ at commencement of the lease.

Annual payments are required to be made on December $31$ at the end of each year of the lease,

beginning December $31,2020.$ The first payment is to be of an amount of $$5,552\mathrm{.}82,$ with each pay$-$

ment increasing by a constant rate of $5\%$ from the previous payment $($i$.$e$.,$ the second payment will

be $$5,830\mathrm{.}46$ and the third and final payment will be $$6,121\mathrm{.}98).$

DU Journeys' incremental borrowing rate is $8\%.$ The rate implicit in the lease is unknown.

DU Journeys uses straight$-$line depreciation for all similar cars.

Instructions

a$.$ Prepare DU Journeys' journal entries for $2019,2020,$ and $2021.$