Pina Corporation leased equipment to Kingbird, Inc. on January 1, 2020. The lease agreement called for annual rental payments of $1,239 at the beginning of each year of the 3-year lease. The equipment has an economic useful life of 7 years, a fair value of $8,800, a book value of $6,800, and Pina expects a residual value of $6,300 at the end of the lease term. Pina set the lease payments with the intent of earning a 6% return, though Kingbird is unaware of the rate implicit in the lease and has an incremental borrowing rate of 8%. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature.

Prepare all necessary journal entries for Kingbird in 2020.

Date	Account Titles and Explanation	Debit	Credit
1/1/2012/31/20
	(To record the lease)
1/1/2012/31/20
	(To record lease payment)
1/1/2012/31/20