Skysong Corporation enters into a 6-year lease of equipment on December 31, 2019, which requires 6 annual payments of $36,300 each, beginning December 31, 2019. In addition, Skysong guarantees the lessor a residual value of $18,400 at the end of the lease. However, Skysong believes it is probable that the expected residual value at the end of the lease term will be $9,200. The equipment has a useful life of 6 years.

Prepare Skysongs' December 31, 2019, journal entries assuming the implicit rate of the lease is 11% and this is known to Skysong. (Credit account titles are automatically indented when 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 0 decimal places e.g. 5,275.)

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Date Account Titles and Explanation Debit Credit

December 31, 2019

(To record the lease liability)

December 31, 2019

(To record lease payment)