Question 7 of 10 4.17/5 E Martinez Corporation leases equipment from Falls Company on January 1, 2020. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment's 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. Prepare Martinez's journal entries on January 1, 2020, and December 31, 2020. Assume the annual lease payment is $32,000 at the beginning of each year, and Martinez's incremental borrowing rate is 5%, which is the same as the lessor's implicit rate. (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 decimal places, eg. 5,265. Record journal entries in the order presented in the problem.) Click here to view factor tables. Date Account Titles and Explanation Debit Credit 1/1/20 Right-of-Use Asset 37044 Lease Liability 37044 (To record lease liability) 1/1/20 Lease Liability 32000 Cash 32004 (To record lease payment) 12/31/20 Lease Expense 32000 Lease Liability 252 Right-of-Use Asset