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 $55,000. |
| 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 $17,517 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.  The choices I picked maybe. wrong, I picked them because to show the few options. I also provided the solution to part A. |
MARIN COMPANY (Lessee) Lease Amortization Schedule Interest on Liability Annual Lease Payment Reduction of Lease Liability Lease Liability i $ i $ i $ 50,088 17,517 0 17,517 32,571 17,517 1,629 15,888 16,683 17,517 834 16,683 0 52,551 $ 2,463 $ 50,088 (b) 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 O decimal places. eg. 5.265. Record journal entries in the order presented in the problem.) ate Account Titles and Explanation Debit Right-of-Use Asset Lease Liability (To record the lease) Lease Liability Cash (To record lease payment) Interest Expense Lease Liability (To record interest expense) Amortization Expense Right-of-Use Asset (To record amortization of the right-of-use asset) Lease Liability Cash (To reverse interest expense) Interest Expense Lease Liability Cash (To record lease payment) Interest Expense Lease Liability (To record interest expense) ortization Expense 1/1/20 ht-of-Use Asset 12/31/20 cord amortization of the right-of-use asset) 1/1/21 12/31/21 Media During 2020 During 2021 Save Tor Later Attempts: 0 of 3 used Submit Answer MARIN COMPANY (Lessee) Lease Amortization Schedule Interest on Liability Annual Lease Payment Reduction of Lease Liability Lease Liability i $ i $ i $ 50,088 17,517 0 17,517 32,571 17,517 1,629 15,888 16,683 17,517 834 16,683 0 52,551 $ 2,463 $ 50,088 (b) 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 O decimal places. eg. 5.265. Record journal entries in the order presented in the problem.) ate Account Titles and Explanation Debit Right-of-Use Asset Lease Liability (To record the lease) Lease Liability Cash (To record lease payment) Interest Expense Lease Liability (To record interest expense) Amortization Expense Right-of-Use Asset (To record amortization of the right-of-use asset) Lease Liability Cash (To reverse interest expense) Interest Expense Lease Liability Cash (To record lease payment) Interest Expense Lease Liability (To record interest expense) ortization Expense 1/1/20 ht-of-Use Asset 12/31/20 cord amortization of the right-of-use asset) 1/1/21 12/31/21 Media During 2020 During 2021 Save Tor Later Attempts: 0 of 3 used Submit
