The following facts pertain to a non-cancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee.

Commencement date		May 1, 2020
Annual lease payment due at the beginning of
each year, beginning with May 1, 2020		$20,471.94
Bargain purchase option price at end of lease term		$4,000
Lease term		5	years
Economic life of leased equipment		10	years
Lessor’s cost		$65,000
Fair value of asset at May 1, 2020		$91,000
Lessor’s implicit rate		8	%
Lessee’s incremental borrowing rate		8	%

The collectibility of the lease payments by Mooney is probable.

Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this lease for the years 2020 and 2021. The lessor’s accounting period ends on December 31. Reversing entries are not used by Mooney.

- (To record the lease) (4 entries)

- (To record lease payment) (2 entries)

- (2 entries)

- (3 entries)

- (2 entries)

Suppose the collectability of the lease payments was not probable for Mooney. Prepare all necessary journal entries for the company in 2020.