Flint Steel Company, as lessee, signed a lease agreement for equipment for $5$ years, beginning December $31,2025.$ Annual rental $($b$)$

Prepare the journal entries, that Flint should record on December $31,2026.($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. List

all debit entries before credit entries.$)$

$($To record annual payment on lease liability.$)$ Prepare the journal entries, that Flint should record on December $31,2027.($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 $0$ decimal places e$.$g$.58,971.$ List all debit entries before credit entries.$)$

$($To record annual payment on lease liability.$)$ What amounts would appear on Flint's December $31,2027,$ balance sheet relative to the lease arrangement? $($Round answers to $0$

decimal places, e$.$g$.58,971.)$

FLINT STEEL COMPANY

Balance Sheet $($Partial$)$

Assets

$

Liabilities

$

$

payments of $$42,000$ are to be made at the beginning of each lease year $($December $31).$ The interest rate used by the lessor in setting

the payment schedule is $4\%$; Flint's incremental borrowing rate is $6\%.$ Flint is unaware of the rate being used by the lessor. At the end

of the lease, Flint has the option to buy the equipment for $$5,000,$ considerably below its estimated fair value at that time. The

equipment has an estimated useful life of $7$ years, with no salvage value. Flint uses the straight$-$line method of depreciation on similar

owned equipment.

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$($a$)$

Prepare the journal entries, that Flint should record on December $31,2025.($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 $0$ for the amounts.

Round present value factor calculations to $5$ decimal places, e$.$g$.1\mathrm{.}25124$ and the final answers to $0$ decimal places, e$.$g$.58,971.$ List all

debit entries before credit entries.$)$

$($To record the first rental payment.$)$