The following facts pertain to a non-cancelable lease agreement between Cullumber Leasing Company and Crane Company, a lessee.Commencement dateAnnual lease payment due at the beginning ofeach year, beginning with January 1, 2025Residual value of equipment at end of lease term,guaranteed by the lesseeExpected residual value of equipment at end of lease termLease termEconomic life of leased equipmentFair value of asset at January 1, 2025Lessor's implicit rateLessee's incremental borrowing rateDate1/1/251/1/251/1/261/1/271/1/281/1/291/1/3012/31/30Lease payment(A)$97,312$97,312$97,312$97,312$97,312$97,312$5,000January 1, 2025$97,312$24,806$20,456$15,845$10,957$5,775$283$55,000$50,00066The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.Table shows the amortization schedule for lessee for the lease term:$546,000yearsyears6 %Interest expense(B = Prev D* 6%)6%Reduction In llability(C=A-B)$97,312$72,506$76,856$81,467$86,355$91,537$4,717Lease llability(D = Prev D-C)$510,750$413,438$340,932$264,076$182,609$96,253$4,717SOPrepare all of the journal entries for the lessee for 2025 and 2026 to record the lease agreement, the lease payments, and allexpenses related to this lease. Assume the lessee's annual accounting period ends on December 31. (Credit account titles areautomatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles andenter o for the amounts. Round answers to O decimal places e.g. 5,275. Record journal entries in the order presented in the problem. List alldebit entries before credit entries.)Date@ FAccount Titles and Explanation(To record the lease.)(To record first lease payment.)(To record interest.)(To record amortization.)(To record amortization.)(To record interest.)DebitCredit|||

2025:January 1, 2025 - Lease Commencement: Dr. Leased Equipment ROU Asset…

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 31. (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 eg. 5,275. Record journal entries in the order presented in the problem. List all debit entries before credit entries) Date Account Titles and Explanation Debit Credit

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 31. (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 eg. 5,275. Record journal entries in the order presented in the problem. List all debit entries before credit entries) Date Account Titles and Explanation Debit Credit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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