The following facts pertain to a non-cancelable lease agreement between Sheridan Leasing and Skysong Group, a lessee (amounts in thousands).

Commencement date		May 1, 2022
Annual lease payment due at the beginning of
each year, beginning with May 1, 2022		25,385.22
Bargain purchase option price at end of lease term		4,960
Lease term		5	years
Economic life of leased equipment		10	years
Lessors cost		80,600
Fair value of asset at May 1, 2022		112,840
Lessors implicit rate		8	%
Lessees incremental borrowing rate		8	%

The collectibility of the lease payments by Sheridan is probable.

Prepare a lease amortization schedule for Skysong for the 5-year lease term.

Prepare the journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2022 and 2023. Skysongs annual accounting period ends on December 31. Reversing entries are used by Skysong.

SKYSONG GROUP (Lessee) Lease Amortization Schedule Interest on Reduction of Lease Liability Liability Annual Lease Payment Plus BPO Date 5/1/22 W V i W 5/1/22 25,385.22 0 25385.22 5/1/23 25,385.22 6996.38 18388.84 5/1/24 25,385.22 5525.28 19859.94 5/1/25 25,385.22 3936.48 21448.74 5/1/26 25,385.22 2220.58 23164.64 4/30/27 4960 367.41 4592.59 131886.10 W 19046.13 W 112840 SKYSONG GROUP (Lessee) Lease Amortization Schedule Interest on Liability : Payment Plus PO Reduction of Lease Liability Lease Liability \ i i W 112840 25,385.22 0 25385.22 87454.78 25,385.22 6996.38 18388.84 69065.94 25,385.22 5525.28 19859.94 49206 25,385.22 3936.48 21448.74 27757.26 25,385.22 2220.58 23164.64 4592.62 4960 367.41 4592.59 0 131886.10 19046.13 \ 112840 Date Account Titles and Explanation Debit Credit 5/1/22 Leased Equipment 112840 Lease Liability 11 (To record the lease) 5/1/22 Lease Liability 25,385.22 Cash 25,3 (To record the first lease payment) 12/31/22 Interest Expense 4664.25 Interest Payable 46 (To record interest expense) 12/31/22 Depreciation Expense Accumulated Depreciation Equipment (To record the depreciation) 1/1/23 Lease Liability Cash 5/1/23 Interest Expense Lease Liability 5/1/23 Interest Expense Lease Liability Cash 25,3 12/31/23 (To record interest expense) 12/31/23 Depreciation Expense Accumulated Depreciation Equipment (To record the depreciation)