LeBron James $($LBJ$)$ Corporation agrees on January $1,2025,$ to lease equipment from Cullumber, Inc. for $3$ years. The lease calls for annual lease payments of $\backslash (\backslash$$ $21000\backslash )$ 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 $\backslash (90\backslash \%\backslash )$ of the fair value of the equipment. Prepare LBJ$\text{'}$s journal entries on January $1,2025($commencement of the operating lease$),$ and on December $31,2025.$ Assume the implicit rate used by the lessor is unknown, and LBJ$\text{'}$s incremental porrowing rate is $\backslash (8\backslash \%\backslash ).$

LeBron James $($LBJ$)$ Corporation agrees on January $1,2025,$ to lease equipment from Pharoah, Inc. for $3$ years. The lease calls for

annual lease payments of $$21,000$ 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$\text{'}$s journal entries on January $1,2025($commencement of the operating lease$),$ and on December $31,2025.$ Assume the

implicit rate used by the lessor is unknown, and LBJ$\text{'}$s incremental borrowing rate is $8\%.($Credit account titles are automatically indented

when the amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter $O$ for the amounts.

List all debit entries before credit entries. For calculation purposes, use $5$ decimal places as displayed in the factor table provided and round final

answers to $0$ decimal places, e$.$g$.5,275.$ Record journal entries in the order presented in the problem.$)$

Click here to view factor tables.

Date

$\frac{1}{1}\frac{?}{25}$

Account Titles and Explanation

Right$-$of$-$Use Asset

Debit

Credit

$($To record lease liability$)$