Problem 21-16 Indigo Corporation entered into a lease agreement on January 1, 2020, to provide Sandhill Company with a piece of machinery. The terms of the lease agreement were as follows. 1. The lease is to be for 3 years with rental payments of $13,089 to be made at the beginning of each year. 2. The machinery has a fair value of $60,000, a book value of $40,000, and an economic life of 8 years. 3. At the end of the lease term, both parties expect the machinery to have a residual value of $25,000, none of which is guaranteed. 1. The lease does not transfer ownership at the end of the lease term, does not have a bargain purchase option, and the asset is not of a specialized nature. 5. The implot rate is 5%, which is known by Dawkins Collectibity of the payment is probable b e there for decation of the lease, and describe the nature of the lease For the lessee, it is and for the lesson it is a SANDHILL COMPANY Lease Amortization Schedule Annuity-Due Basis Interest on Liability L ease Liability Lease Liability Annual Payment Date 1/120 11/20 13089 1/1/21 13009 13089 13089 C D 1/1/22 TE Lease Expense Schedule (*) (A) Straight-Line (6) Interest on Case Liability Amortization of Right-of-Use Asset and Liability) (*) Carrying Value of Right-of-Use Asset LINTO Prepare the 2020 journal entries for Sandhill. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is ree account titles and enter o for the amounts. Round present value factor calculations to 5 decimal places, .g. 1.25124 and the final answer to decimal places e Date Account Titles and Explanation Debit Credit Jan. 1 Right-of-Use Asset Lease Liability (To record lease) Jan. 1 Lease Liability I cas To record first lease payment) Dec 31 Lease Expense Les Liability Right-of-Use Asset To record expense and amortizat