Susan Leasing Company signs an agreement on January $1,2025,$ to lease equipment to Splish Brothers Company. The

following information relates to this agreement.

The term of the non$-$cancelable lease is $3$ years with no renewal option. The equipment has an estimated

economic life of $5$ years.

The fair value of the asset at January $1,2025,$ is $$77,000.$

The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a

residual value of $$7,000,$ none of which is guaranteed.

The agreement requires equal annual rental payments of $$24,523\mathrm{.}49$ to the lessor, beginning on January $1,$

The lessee's incremental borrowing rate is $5\%.$ The lessor's implicit rate is $4\%$ and is unknown to the lessee.

Splish Brothers uses the straight$-$line depreciation method for all equipment.

Click here to view factor tables.

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

$($a$)$

Your Answer

Prepare an amortization schedule that would be suitable for the lessee for the lease term. $($Round answers to $2$

decimal places, e$.$g$.5,275\mathrm{.}15.)$

$($b$)$

Your answer is partially correct.

Prepare all of the journal entries for the lessee for $2025$ and $2026$ to record the lease agreement, the lease

payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December

$($List all debit entries before credit entries. Credit account titles are automatically indented

when amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the

account titles and enter $0$ for the amounts. Round answers to $2$ decimal places, e$.$g$.5,275\mathrm{.}15.$

Record journal entries in the order presented in the problem.$)$ please do Part B