Laura Leasing Company signs an agreement on January $1,2020,$ to lease equipment to Larkspur Company. The following information

relates to this agreement.

The term of the non$-$cancelable lease is $3$ years with no renewal option. The equipment has an estimated economic life of $5$

years.

The fair value of the asset at January $1,2020,$ is $$63,000.$

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.

The agreement requires equal annual rental payments of $$20,289$ to the lessor, beginning on January $1,2020.$

The lessee's incremental borrowing rate is $5\%.$ The lessor's implicit rate is $4\%$ and is unknown to the lessee.

Larkspur uses the straight$-$line depreciation method for all equipment.

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, e$.$g$.5,265.$ Record journal

entries in the order presented in the problem.$)$

$($To record the lease$)$

$($To record lease payment$)$

$($To record interest expense$)$

$($To record amortization of the right$-$of$-$use asset$)$

$($To reverse interest expense$)$

$($To record lease payment$)$

$($To record interest expense$)$