LeBron James (LBJ) Corporation agrees on January 1, 2020, to lease equipment from Sandhill, Inc. for 3 years. The lease calls for

annual lease payments of $26.000 at the beginning of each year. The lease does not transfer ownership, nor does it contain a bargain

purchase option, and is not a specialized asset. In addition, the useful life of the equipment is 10 years, and the present value of the

lease payments is less than 90% of the fair value of the equipment.

Prepare BJ's journal entries on January 1, 2020 (commencement of the operating lease), and on December 31, 2020. Assume the

implicit rate used by the lessor is unknown, and BJ's incremental borrowing rate is 5%. (Credit account titles are automatically indented

when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided

and round final answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.)

Click here to view factor tables.

Your answer is partially correct. LeBron James (LBJ) Corporation agrees on January 1, 2020, to lease equipment from Sandhill, Inc. for 3 years. The lease calls for annual lease payments of $26,000 at the beginning of each year. The lease does not transfer ownership, nor does it contain a bargain purchase option, and is not a specialized asset. In addition, the useful life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment. Prepare LBJ's journal entries on January 1, 2020 (commencement of the operating lease), and on December 31, 2020, Assume the implicit rate used by the lessor is unknown, and LBJ's incremental borrowing rate is 5%. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, eg. 5,275. Record journal entries in the order presented in the problem.) Click here to view factor tables. Date 1/1/20 Account Titles and Explanation Right-of-Use Asset Debit Credit Date 1/1/20 1/1/20 12/31/20 Account Titles and Explanation Right-of-Use Asset Lease Liability (To record lease liability) Lease Liability Cash (To record lease payment) Lease Expense Leave ability List of Accounts Kofe Asset Debit 26000 26000 Credit 26000 HII