Problem 21-03 (Part Level Submission) Headland Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $46,000 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%; Headland's incremental borrowing rate is 9%. Headland is unaware of the rate being used by the lessor. At the end of the lease, Headland 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. Headland uses the straight-line method of depreciation on similar owned equipment. Your answer is correct. Prepare the journal entries, that Headland should record on December 31, 2020. (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. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to o decimal places, e.g. 58,971.) Date Account Titles and Explanation Debit Credit December 31, 2020 TRight-of-Use Asset 198276 198276 Lease Liability (To record leased asset and related liability.) Lease Liability 46000 Cash 46000 (To record the first rental payment.) Your answer is correct. Prepare the journal entries, that Headland 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 Amortization Expense 28325 28325 Right-of-Use Asset (To record amortization.) Lease Liability 32295 Interest Expense 13705 46000 Cash (To record annual payment on lease liability.) Your answer is partially correct. Try again. Prepare the journal entries, that Headland should record on December 31, 2022. (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. Round answers to o decimal places e.g. 58,971.) Debit Credit Date Account Titles and Explanation December 31, 2022 Amortization Expense 714 714 Accumulated Depreciati (To record annual amortization on leased assets.) Lease Liability 46000 Interest Expense 4140 50140 Cash (To record annual payment on lease liability.)