Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Larkspur Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2020, is $66,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $5,000, none of which is guaranteed. 4. The agreement requires equal annual rental payments of $21,328 to the lessor, beginning on January 1, 2020. 5. The lessee's incremental borrowing rate is 5%. The lessor's implicit rate is 4% and is unknown to the lessee. 6. Larkspur uses the straight-line depreciation method for all equipment. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) LARKSPUR COMPANY (Lessee) Lease Amortization Schedule Annual Lease Payment Interest on Liability Reduction of Lease Liability Date Lease Liability 1/1/20 $ $ $ $ 60986 1/1/20 21328 0 21328 39658 1/1/21 21328 1983 19345 20313 1/1/22 21328 1015 20313 0 $ 63984 $ 2998 $ 60986 Prepare all of the journal entries for the lessee for 2020 and 2021 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, eg. 5,265. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/20 Right-of-Use Asset 66000 Lease Liability (To record the lease) 1/1/20 Lease Liability 21328 Cash (To record lease payment) 12/31/20 Interest Expense 20333 Lease Liability (To record interest expense) 12/31/20 Amortization Expense 1787 Right-of-Use Asset (To record amortization of the right-of-use asset) 1/1/21 Lease Liability 19541 Interest Expense 1787 (To reverse interest expense) 1/1/21 Lease Liability Interest Expense Cash (To record lease payment) 12/31/21 Interest Expense Lease Liability (To record interest expense) 12/31/21 Amortization Expense Right-of-Use Asset (To record amortization of the right-of-use asset)