Exercise 21-11 Laura Leasing Company signs an agreement on January 1, 2017, to lease equipment to Novak Company. The following information relates to this agreement. 1. The term of the noncancelable lease is 5 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2017, is $74,100. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $6,900, none of which is guaranteed. 4. Novak Company assumes direct responsibility for all executory costs, which include the following annual amounts: (1) $850 to Rocky Mountain Insurance Company for insurance and (2) $1,750 to Laclede County for property taxes. 5. The agreement requires equal annual rental payments of $16,742.92 to the lessor, beginning on January 1, 2017. 6. The lessee's incremental borrowing rate is 12%. The lessor's implicit rate is 10% and is known to the lessee. 7. Novak Company uses the straight-line depreciation method for all equipment. 8. Novak uses reversing entries when appropriate. Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and Round answers to 2 decimal places, e.g. 15.25.) NOVAK COMPANY (Lessee Lease Amortization Schedule Annual Lease Interest on Reduction of Lease Payment Liability Liability Date Lease Liability 1/1/17 $ 1/1/17 1/1/18 1/1/19 1/1/20 1/1/21 $ Prepare all of the journal entries for the lessee for 2017 and 2018 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31. (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 o for the amounts. Round answers to 2 decimal places, e.g. 15.25.) Date Account Titles and Explanation Debit Credit (To record the lease.) (To record lease payment.) (To record insurance payment.) (To record property tax payment.) (To record interest.) (To record depreciation.) (To reverse interest.) (To record lease payment.) (To record insurance payment.) (To record property tax payment.) (To record interest.) (To record depreciation.) Click if you would like to Show Work for this question: Open Show Work