Indigo Incorporated leases a piece of equipment to Teal Mountain Corporation on January 1, 2020. The lease agreement called for annual rental payments of $5,176 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 $26,100, a book value of $21,100, and both parties expect a residual value of $8,300 at the end of the lease term, though this amount is not guaranteed. Indigo set the lease payments with the intent of earning a 5% return, and Teal Mountain 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.

x Your answer is incorrect. Try again. What is the amount of the rental payments used in the lease agreement? (Round answer to 0 decimal places, e.g. 5,275.) Rental payments Prepare the entries for Indigo for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. I Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/20 12/31/20v (To record the recognition of the revenue) 1000 12/31/20v (To record depreciation expense on the leased equipment)