On January 1, 2020, Lessee Inc. leased equipment at an annual payment of $85,099 payable at the beginning of each year for 4 years. The equipment had a fair value of $400,000, a book value of $375,000, and was commonly purchased or leased by customers. The lessor estimates that the equipment has an estimated useful life of 8 years and an estimated residual value of $125,000, not guaranteed by the lessee. Lessors implicit rate is 7.5%, which is unknown to the lessee. The lessees incremental borrowing rate is 8%. The lease does not contain a purchase option or a renewal option. The lessee had no other costs associated with this lease. d

d. Prepare the entries for Lessee Inc. for the years 2020 and 2021, assuming Lessee Inc.'s accounting year ends December 31. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round your answers to the nearest whole dollar. Dr. Cr. Date Jan. 1, 2020 07 Account Name Cost of Goods Sold X Loss on Lease x To record lease liability and right-of-use asset Cost of Goods Sold 0 0 x Jan. 1, 2020 0 x 0 Interest Revenue - X 0 0 x To record lease payment Dec. 31, 2020 Cash Cash - 0 x 0 X X X 0 OX Cash 0 OX X OX 0 - x 0 0 x To record lease expense Jan. 1, 2021 Cash Cost of Goods Sold To record lease payment Dec. 31, 2021 Cash Cash . x OX 0 . 0 0X X X A 0 OX Lease Expense To record lease expense G