Vaughn Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $57,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Vaughn's incremental borrowing rate is 9%. Vaughn is unaware of the rate being used by the lessor. At the end of the lease, Vaughn has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Vaughn uses the straight-line method of depreciation on similar owned equipment. Click here to view factor tables. Prepare the journal entries, that Vaughn should record on December 31, 2020. (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 O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places, e.g. 58,971.) Date December 31, 2020 Account Titles and Explanation (To record leased asset and related liability.) (To record the first rental payment.) Debit Credit Prepare the journal entries, that Vaughn should record on December 31, 2022. (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 O for the amounts. Round answers to O decimal places e.g. 58,971.) Date Account Titles and Explanation December 31, 2022 (To record annual amortization on leased assets.) (To record annual payment on lease liability.) Debit Credit What amounts would appear on Vaughn's December 31, 2022, balance sheet relative to the lease arrangement? (Round answers to O decimal places, e.g. 58,971.) VAUGHN STEEL COMPANY Balance Sheet Assets Liabilities $ $