Exercise 21-02 On December 31, 2019, Marin Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Marin to make annual payments of $8,566 at the beginning of each year of the lease, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $4,500 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Marin uses the straight-line method of depreciation for all of its plant assets. Marin's incremental borrowing rate is 4%, and the lessor's implicit rate is unknown. Click here to view factor tables. Your answer is correct. What type of lease is this? This is a/an finance lease. SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT LINK TO TEXT x Your answer is incorrect. Try again. Compute the present value of the lease payments. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places e.g. 5,275.) Present value of the lease payments 38134 Prepare all necessary journal entries for Marin for this lease through December 31, 2020. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit (12/31/19 TRight-of-Use Asset 33634 Lease Liability 42200 (To record the lease) 12/31/19 8566 Lease Liability M Cash 8566 (To record first lease payment) 12/31/20 Amortization Expense 7627 Right-of-Use Asset 6727 (To record amortization of the right-of-use asset) X Lease Liability 12/31/20 7563 Interest Expense 1003 Cash 8566 (To record interest expense)