storage building from Sandhill Storage Company. The following information pertains to this lease agreement.

$1$ The agreement requires equal rental payments of $$66,999$ beginning on December $31,2024.$

$2$ The fair value of the building on December $31,2024,$ is $$490,629.$

The building has an estimated economic life of $12$ years, a guaranteed residual value of $$11,000,$ and an expected

residual value of $$8,100.$ Kimberly$-$Clark depreciates similar buildings on the straight$-$line method.

The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor.

Kimberly$-$Clark's incremental borrowing rate is $8\%$ per year. The lessor's implicit rate is not known by Kimberly$-$

Clark.

Click here to view factor tables.

$($For calculation purposes, use $5$ decimal places as displayed in the factor table provided$)$

$($a$)$

Vour answer is partlally correct.

Prepare the journal entries on the lessee's bools to reflect the signing of the lease agreement and to record the

payments and expenses related to this lease for the years $2024,2025,$ and $2026.$ Kimberly$-$Clark's fiscal year$-$end is:

December $31.($List ail debit entrles before credit entrier. Credit account tities are autamatically indented when amount is

entered. Do not indent menually. if no entry is required, select $"$No Entry" for the occount tities and enter O for the amounts.

Round answers to O decimal places eg $5\mathrm{.}275.)$

Date Account Titles and Explanation

Debit

Credit

$($To record the lease$)$

$($To record amartization of the right$-$of$-$use asset$)$

$($To record interest expense$)$

Amortization Euperse

Cinh

$($To record amortization of the right$-$of$-$use asset$)$

Leawe Liability

Interest Expenie

Cash