Rauch Incorporated leases a piece of equipment to Donahue Corporation on January 1, 2020. The lease agreement called for annual rental payments of $4,892 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 6 years, a fair value of $25,000, a book value of $20,000, and both parties expect a residual value of $8,250 at the end of the lease term, though this amount is not guaranteed. Rauch set the lease payments with the intent of earning a 5% return, and Donahue is aware of this rate. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature.

Prepare the journal entries for Donahue for 2020 and 2021 . (Credit account titles are automatically indented when the amount is entered. Do not indent manuallv. Record iournal entries in the order oresented in the problem.l Prepare the journal entries for Donahue for 2020 and 2021 . (Credit account titles are automatically indented when the amount is entered. Do not indent manuallv. Record iournal entries in the order oresented in the problem.l