On January 1, 2025, Sweet Company contracts to lease equipment for 5 years, agreeing to make a payment of $150,482 at the beginning of each year, starting January 1, 2025. The leased equipment is to be capitalized at $638,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Sweets incremental borrowing rate is 10%, and the implicit rate in the lease is 9%, which is known by Sweet. Title to the equipment transfers to Sweet 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)

Prepare the journal entries that Sweet should record on January 1, 2025. (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 0 for the amounts. List all debit entries before credit entries. For calculation purposes, round factor value calculations to 5 decimal places, e.g. 0.52752. Round final answers to 0 decimal place, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
January 1, 2025	enter an account title to record the lease on January 1, 2025	enter a debit amount	enter a credit amount
	enter an account title to record the lease on January 1, 2025	enter a debit amount	enter a credit amount
	(To record the lease.)
	enter an account title to record lease payment on January 1, 2025	enter a debit amount	enter a credit amount
	enter an account title to record lease payment on January 1, 2025	enter a debit amount	enter a credit amount
	(To record lease payment.)

Question Part Score

1.5/1.5

(c)

Prepare the journal entries to record amortization of the leased asset and interest expense for the year 2025. (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 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275. List all debit entries before credit entries.)

Date	Account Titles and Explanation	Debit	Credit
December 31, 2025	enter an account title to record amortization of the leased asset on December 31, 2025	enter a debit amount	enter a credit amount
	enter an account title to record amortization of the leased asset on December 31, 2025	enter a debit amount	enter a credit amount
	(To record amortization of the leased asset.)
December 31, 2025	enter an account title for the journal entry on December 31, 2025	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on December 31, 2025	enter a debit amount	enter a credit amount
	(To record interest on lease payment.)