A185Operating Lease ; Lessee Inducement : A185 Operating Lease ; Lessee Inducement Legal Services Inc . leases space in an office complex and has recently signed a new , fouryear lease , at the rate of $9,200 per month . However , the lessor offered six months "free " rent at the beginning of the lease as an inducement to sign the lease agreement The lease agreement was signed on 1 October 20X1 ; the lease will commence on 1 November 2 20X1 . The company has a 31 December fiscal yearend . Rent is due on the first day of each month Required: 1. Prepare journal entries for the first , sixth , and seventh months of the lease . Assume that financial statements are prepared monthly. 2. What amounts would be shown on the company's SCI and SFP for this lease as of 31 December 20X2 ? A186Finance Lease; Lessee Liability Amortization Table and Entries A186 Finance Lease; Lessee Liability Amortization Table and Entries On 31 December 20X0 , Columbia Inc . entered into an agreement with Scotia Ltd . to lease equipment . Columbia Inc . will make four equal payments of $80,000 at the beginning of each lease year . Columbia Ltd . anticipates that the equipment will have a residual value of $64,000 at the end of the lease , net of removal costs . Columbia Inc . has the option of (1) paying $64,000 to retain the equipment or (2) allowing Scotia Ltd . to remove it. Scotia Ltd.'s implicit interest rate in this lease is 7%. Columbia Inc.'s incremental borrowing rate is $%. Columbia Inc . depreciates the leased equipment on a straightline basis over four years . The lease commences on 1 January 20X1 . Assume that the fair value of the equipment on the open market is greater than the present value of the lease payments Required: 1. Prepare a lease liability amortization table for this lease for Columbia Inc . 2. Prepare all entries that Columbia Inc . will record for this lease and the leased equipment for 20X1 and 20X2