Question 3 of 10 View Policies Show Attempt History < Current Attempt in Progress Your answer is partially correct. 0.79/1 E ... Pharoah Co. leased machinery from Young, Inc. on January 1, 2020. The lease term was for 8 years, with equal annual rental payments of $5,900 at the beginning of each year. In addition, the lease provides an option to purchase the machinery at the end of the lease term for $1,500, which Pharoah is reasonably certain it will exercise as it believes the fair value of the machinery will be at least $5,000. The machinery has a useful life of 10 years and a fair value of $44,000. The implicit rate of the lease is not known to Pharoah. Pharoah's incremental borrowing rate is 9%. Prepare Pharoah's 2020 journal entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Click here to view factor tables. Date Account Titles and Explanation 1/1/20 1/1/20 Right-of-Use Asset Lease Liability (To record lease liability) Lease Liability Cash (To record lease payment) 12/31/20 Interest Expense Lease Liability (To record interest expense) Debit Credit 5,900 5,900