Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Marin 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 $63,000.

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 $20,289 to the lessor, beginning on January 1, 2020.

5. The lessees incremental borrowing rate is 5%. The lessors implicit rate is 4% and is unknown to the lessee.

6. Marin uses the straight-line depreciation method for all equipment.

Requirement:

1.

2. 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 lessees 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, e.g. 5,265. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit
1/1/2012/31/201/1/2112/31/21During 2020During 2021	enter an account title To record the lease	enter a debit amount	enter a credit amount
	enter an account title To record the lease	enter a debit amount	enter a credit amount
	(To record the lease)
1/1/2012/31/201/1/2112/31/21During 2020During 2021	enter an account title To record lease payment	enter a debit amount	enter a credit amount
	enter an account title To record lease payment	enter a debit amount	enter a credit amount
	(To record lease payment)
1/1/2012/31/201/1/2112/31/21During 2020During 2021	enter an account title To record interest expense	enter a debit amount	enter a credit amount
	enter an account title To record interest expense	enter a debit amount	enter a credit amount
	(To record interest expense)
1/1/2012/31/201/1/2112/31/21During 2020During 2021	enter an account title To record amortization of the right-of-use asset	enter a debit amount	enter a credit amount
	enter an account title To record amortization of the right-of-use asset	enter a debit amount	enter a credit amount
	(To record amortization of the right-of-use asset)
1/1/2012/31/201/1/2112/31/21During 2020During 2021	enter an account title To reverse interest expense	enter a debit amount	enter a credit amount
	enter an account title To reverse interest expense	enter a debit amount	enter a credit amount
	(To reverse interest expense)
1/1/2012/31/201/1/2112/31/21During 2020During 2021	enter an account title To record lease payment	enter a debit amount	enter a credit amount
	enter an account title To record lease payment	enter a debit amount	enter a credit amount
	enter an account title To record lease payment	enter a debit amount	enter a credit amount
	(To record lease payment)
1/1/2012/31/201/1/2112/31/21During 2020During 2021	enter an account title To record interest expense	enter a debit amount	enter a credit amount
	enter an account title To record interest expense	enter a debit amount	enter a credit amount
	(To record interest expense)
1/1/2012/31/201/1/2112/31/21During 2020During 2021	enter an account title To record amortization of the right-of-use asset	enter a debit amount	enter a credit amount
	enter an account title To record amortization of the right-of-use asset	enter a debit amount	enter a credit amount
	(To record amortization of the right-of-use asset)

Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to O decimal places, e.g. 5,265.) MARIN COMPANY (Lessee) Lease Amortization Schedule Annual Lease Payment Interest on Liability Reduction of Lease Liability Date Lease Liabil 1/1/20 $ $ $ $ 1/1/20 1/1/21 1/1/22 $ $ $ Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to O decimal places, e.g. 5,265.) MARIN COMPANY (Lessee) Lease Amortization Schedule Annual Lease Payment Interest on Liability Reduction of Lease Liability Date Lease Liabil 1/1/20 $ $ $ $ 1/1/20 1/1/21 1/1/22 $ $ $