Sheridan Company, as lessee, enters into a lease agreement on July 1, 2021 , for equipment. The following data are relevant to the lease agreement: 1. The term of the noncancelable lease is 4 years, with no renewal option. Payments of $874,647 are due on July 1 of each year. 2. The fair value of the equipment on July 1,2021 is $3,170,000. The equipment has an economic life of 6 years with no salvage value. 3. Sheridan depreciates similar machinery it owns on the sum-of-the-years'-digits basis. 4. The lessee pays all executory costs. 5. Sheridan's incremental borrowing rate is 10% per year. The lessee is aware that the lessor used an implicit rate of 7% in computing the lease payments. Prepare the journal entries on Sheridan's books that relate to the lease agreement for the following dates: (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,250.) 1. July 1,2021. 2. December 31,2021. 3. July 1,2022. 4. December 31, 2022. July 1, 2021 July 1, 2021 December 31, 2021 V December 31, 2022 v July 1, 2022 July 1,2022 Right-of-Use Asset Lease Liability Lease Liability Cash (To record amortization.) Interest Expense Interest Payable (To record interest payment.) Depreciation Expense Right-of-Use Asset Interest Expense Interest Payable December 31, 2021 Interest Payable (To record interest payment.) December 31, 2022 July 1,2022 December 31, 2022 Interest Expense Depreciation Expense Right-of-Use Asset Interest Expense Interest Payable (To record amortization.) Lease Liability Cash (To record interest payment.) List of Accounts