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how do I do this? Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from
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Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of $68,299 beginning on December 31, 2019. 2. The fair value of the building on December 31, 2019 is $500,513. 3. The building has an estimated economic life of 12 years, a guaranteed residual value of $12,000, and an expected residual value of $7,800. Kimberly-Clark depreciates similar buildings on the straight-line method. 4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Kimberly-Clark's incremental borrowing rate is 8% per year. The lessor's implicit rate is not known by Kimberly-Clark. Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019,2020, and 2021 Kimberly-Clark's fiscal year-end is December 31. (Credit account titles are automatically indented when amount is entered. Do not indent mamaally. Round answers to 0 decimal placesey. 5.275) Date Account Titles and Explanation Debit Credit 119 Right-of-Use Asset 496901 Lease Llability 496901 (To record the lease) 19 Lease Llability 68299 Cash 68299 (To record first lease payment) 20 Amortization Expense 49890 Right-of-use Asset 49690 (To record amortization of the right-of-use asset) 120 31567 Interest Expense 36732 II III IN IN TOTAL 68290 (To record interest expense). 21 v Amortizarlon Eteerde Right- 49610 (To record amortization of the right-of-use asset) Lease ability 34288 ritereses Cash 68299 To record interest expense)Step by Step Solution
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