Question 4 of 12 - / 1 III View Policies Current Attempt in Progress Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Larkspur Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2020, is $55,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $5,000, none of which is guaranteed. 4. The agreement requires equal annual rental payments of $17,517 to the lessor, beginning on January 1, 2020. 5. The lessee's incremental borrowing rate is 5%. The lessor's implicit rate is 4% and is unknown to the lessee. 6. Larkspur uses the straight-line depreciation method for all equipment. Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 0 decimal places, e.g. 5,265.) LARKSPUR COMPANY (Lessee) Lease Amortization Schedule Annual Lease Payment Interest on Liability Reduction of Lease Liability ate Lease Liability /20 $ ta 0 $ O tA $ /20 17517 O 17517 /21 17517 /22 17517 $ 52551 $ $ ta Prepare all of the journal entries for the lessee for 2020 and 2021 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,265. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/20 Right-of-Use Asset Lease Liability (To record the lease) 1/1/20 lease Cash (To record lease pa 12/31/20 Interest Expense Lease Liability (To record interest expense) 12/31/20 Amortization Expense right (To record amortization of the right-of-use asset) 1/1/21 Lease Liability Interest Expense (To reverse interest expense) 1/1/21 Lease Liability Interest Expense cash (To record lease payment) 2/31/21 Interest Expense Lease Liability (To record interest expense) 12/31/21 Amortization Expense Right-of-Use Asset (To record amortization of the right-of-use asset)