Kingbird Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $54,000 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 6%; Kingbird's incremental borrowing rate is 8%. Kingbird is unaware of the rate being used by the lessor. At the end of the lease, Kingbird 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. Kingbird uses the straight-line method of depreciation on similar owned equipment. In iCloud Click here to view factor tables. Your answer is partially correct. Prepare the journal entries, that Kingbird should record on December 31, 2020. (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 present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to 0 decimal places, e.g. 58,971.) Date Account Titles and Explanation Debit Credit December 31, 2020 Right-of-Use Asset 241116 Lease Liability 241116 (To record leased asset and related liability.) Lease Liability 54000 Cash 54000 Prepare the journal entries, that Kingbird should record on December 31, 2021. (Credit account titles are automatically ndented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account itles and enter O for the amounts.) In iCloud Date Account Titles and Explanation Debit Credit December 31, 2021 Amortization Expense 48223 Right-of-Use Asset 48223 (To record amortization.) Interest Expense 11227 Lease Liability 42773 Cash 54000 (To record annual payment on lease liability.) Prepare the journal entries, that Kingbird should record on December 31, 2022. (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 er o for the amounts. Round answers to 0 decimal places e.g. 58,971.) In iCloud Date Account Titles and Explanation Debit Credit December 31, 2022 Amortization Expense 48223 Right-of-Use Asset 48223 (To record annual amortization on leased assets.) Interest Expense 8661 Lease Liability 45339 Cash 54000 (To record annual payment on lease liability.) What amounts would appear on Kingbird's December 31, 2022, balance sheet relative to the lease arrangement? (Round answers to O decimal places, e.g. 58,971.) KINGBIRD STEEL COMPANY Balance Sheet In iCloud December 31, 2022 Assets Non-current Assets Right-of-Use Asset $ 144670 Liabilities Current Liabilities Lease Liability $ 48060 Long-term Liabilities Lease Liability $ 50943
