Laura Leasing Company signs an agreement on January $1,2020,$ to lease equipment to Splish 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 $$77,000.$

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

$$9,000,$ none of which is guaranteed.

The agreement requires equal annual rental payments of $$23,907\mathrm{.}43$ 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.

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

Click here to view factor tables.

Prepare all of the journal entries for the lessee for $2020$ 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 $31.($For calculation purposes, use $5$ decimal places as

displayed in the factor table provided and round answers to $2$ decimal places, e$.$g$.5,265\mathrm{.}25.$ Credit account titles are automatically indented

when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.$)$

Date

Account Titles and Explanation

Debit

Credit

$($To record the lease$)$

$($To record lease liability$)$