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On January 1, 2020, Headland Company contracts to lease equipment for 5 years, agreeing to make a payment of $151,860 at the beginning of each

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On January 1, 2020, Headland Company contracts to lease equipment for 5 years, agreeing to make a payment of $151,860 at the beginning of each year, starting January 1, 2020. The leased equipment is to be capitalized at $623,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Headland's incremental borrowing rate is 6%, and the implicit rate in the lease is 11%, which is known by Headland. Title to the equipment transfers to Headland at the end of the lease. The asset has an estimated useful life of 5 years and no residual value. Click here to view factor tables. (b) Your answer is correct. Prepare the journal entries that Headland should record on January 1, 2020. (Credit account titles are automatically indented when 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. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit January 1, 2020 Right-of-Use Asset 623,000 Lease Liability 623,000 (To record the lease.) Lease Liability 151,860 Cash 151,860 (To record lease payment.) eTextbook and Media List of Accounts Attempts: 1 of 4 used Using multiple attempts will impact your score. 50% score reduction after attempt 3 (c) Prepare the journal entries to record amortization of the leased asset and interest expense for the year 2020. (Credit account titles are automatically indented when 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. Round answers to O decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit December 31, 2020 Amortization Expense 249.200 Right-of-Use Asset 249,200 (To record amortization of the leased asset.) December 31, 2020 Interest Expense Interest Payable

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