Wildhorse Corporation agrees on January $1,2025,$ to lease equipment from Blossom, Inc. for $3$ years. The lease calls for annual lease payments of $$10,000$ at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. In addition, the economic life of the equipment is $10$ years, and the present value of the lease payments is less than $90\%$ of the fair value of the equipment.

Prepare Wildhorse' journal entries on January $1,2025($commencement of the operating lease$),$ and on December $31,2025.$ Assume the implicit rate used by the lessor is $6\%,$ and this is known to Wildhorse. $($List all debit entries before credit entries. Credit account titles are automatically indented when the 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. For calculation purposes, use $5$ decimal places as displayed in the factor table provided and round final answers to $"0"$ decimal places, e$.$g$.5,275.$ Recordiournal entries in the order presented in the problem.$)$

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Date

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Account Titles and Explanation

Right$-$of$-$Use Asset

Lease Liability

$($To record lease liability$)$

Lease Liability $$

$$

$($To record lease payment$)$

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$$

Lease Liability

Debit

Credit

$$

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$$

$$

$$

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$$

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