Question 5 --/1 View Policies Current Attempt in Progress Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Skysong 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 $85,000. 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 $27,911 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. Skysong uses the straight-line depreciation method for all equipment. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) 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.) SKYSONG COMPANY (Lessee) Lease Amortization Schedule Annual Lease Payment Interest on Liability Reduction of Lease Liability Date Lease Liability 1/1/20 $ $ 1/1/20 1/1/21 1/1/22 e Textbook and Media List of Accounts 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 O 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 Liability Cash (To record lease payment) 12/31/20 Interest Expense Lease Liability (To record interest expense) 12/31/20 - Amortization Expense Right-of-Use Asset (To record amortization of the right-of-use asset) 1/1/21 Lease Liability (To reverse interest expense) 1/1/21 Interest Expense Lease Liability Cash (To record lease payment) 12/31/21 - 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) e Textbook and Media List of Accounts