?Pharoah, Inc. has entered an agreement to lease an old warehouse with a useful life of $5$ ?years and a fair value of $$44,000$ ?from

Sheridan Corporation. The agreement stipulates the following.

$,$ ?Rental payments of $$10,552$ ?are to be made at the start of each year of the $5-$year lease. No residual value is expected at the

end of the lease.

$,$ ?Pharoah must reimburse Sheridan each year for any real estate taxes incurred for the year. Last year, the cost of real estate

taxes was $$700,$ ?though these costs vary from year to year.

$,$ ?Pharoah must make a payment of $$500$ ?with the rental payment each period to cover the insurance Sheridan has on the

warehouse.

$,$ ?Pharoah paid legal fees of $$1,000$ ?in executing the lease.

Assuming Pharoah's incremental borrowing rate is $10\%$ ?and the rate implicit in the lease is unknown, prepare the journal entry to

record the initial lease liability and right$-$of$-$use asset for Pharoah. $($List all debit entries before credit entries. 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 $0$ ?for the amounts. For calculation purposes, use $5$ ?decimal places as displayed in the factor table

provided and round final answers to $0$ ?decimal places, e$.$g$.5,275.)$

Click here to view factor tables.

Account Titles and Explanation

Credit

Right$-$of$-$Use Asset