Oriole Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $45,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Orioles incremental borrowing rate is 9%. Oriole is unaware of the rate being used by the lessor. At the end of the lease, Oriole has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Oriole uses the straight-line method of depreciation on similar owned equipment.

Prepare the journal entries, that Oriole should record on December 31, 2021. (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.)

(b) Your answer is partially correct. Try again. ACC-371 TOPIC 06 ASSIGNMENT Exercise 21-02 (Part Level Submission) Exercise 21-03 (Part Level Submission) Exercise 21-12 (Part Level Submission) Problem 21-03 (Part Level Submission) Problem 21-06 (Part Level Submission) Prepare the journal entries, that Oriole should record on December 31, 2021. (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.) Date Account Titles and Explanation Debit Credit December 31, 2021 TAmortization Expense 38807 Review Score Review Results by Study Objective Right-of-Use Asset 338807 (To record amortization.) Lease Liability Loss on Capital Lease Cash 45000 (To record annual payment on lease liability.) SHOW LIST OF ACCOUNTS