Use the same facts as E15.23, but assume the lease is considered an operating lease. What entry will Wenke make when the lease is signed? What entry(s) are made on December 31, 2019? What is reported on the financial statements? How would Wenke know this is an operating lease? What entry is made on January 1, 2020, when the lease payment is made?

Data from E15.23

On January 1, 2019, Wenke Corp signs a lease to use a piece of equipment for seven years. The lease requires Wenke to make seven payments of $27,865, the first of which is on January 1, 2019, the date the lease is signed. Wenke’s market interest rate is 9 percent. Assuming this is a capital lease, what entry will Wenke make when the lease is signed? What entry(s) are made on December 31, 2019? What is reported on the financial statements? What factors are used to determine if this is a capital lease? What entry is made on January 1, 2020, when the second lease payment is made?