Exercise 21-21 a-d

Bramble Incorporated leases a piece of equipment to Marin Corporation on January 1, 2020. The lease agreement called for annual rental payments of $5,702 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 6 years, a fair value of $28,100, a book value of $23,100, and both parties expect a residual value of $8,350 at the end of the lease term, though this amount is not guaranteed. Bramble set the lease payments with the intent of earning a 5% return, and Marin is aware of this rate. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature.

ARIN CORP Lease Amortization Schedule Annuity-Due Basis Reduction of Annual Payment Interest on Liability Lease Liability Lease Liability Date 1/1/20 1/1/20 1/1/21 1/1/22 1/1/23 Lease Expense Schedule Interest on Lease Liability Lease Expense (Straight-Line) Amortization of Carrying Value of ROU Asset Date ROU Asset 1/1/20 12/31/20 12/31/21 12/31/22 12/31/23 Prepare the journal entries for Marin for 2020 and 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Account Titles and Explanation Debit Credit Date (To record the lease) (To record lease payment) Suppose Marin incurs initial direct costs of $750 related to the lease. Prepare the journal entries for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Account Titles and Explanation Credit Debit Date (To record the lease) (To record lease payment)