LeBron James (LBJ) Corporation agrees on January 1, 2020, to lease equipment from Cavaliers, Inc. for 3 years. The lease calls for annual lease payments of $23,000 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. Assume the implicit rate used by the lessor is unknown, and LBJ's incremental borrowing rate is 6%.

Prepare LBJs journal entries on January 1, 2020 (commencement of the operating lease), and ALL JOURNAL ENTRIES UNTIL THE END OF THE LEASE. Assume the implicit rate used by the lessor is unknown, and LBJs incremental borrowing rate is 6%.

ALSO, DO JOURNAL ENTRIES FROM A LESSOR PERSPECTIVE.

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