Current Attempt in Progress

Assume that on December $31,2024,$ Kimberly$-$Clark Corp. signs a $10-$year, non$-$cancelable lease agreement to lease a storage building from Cullumber Storage Company. The following information pertains to this lease agreement.

$1.$ The agreement requires equal rental payments of $\backslash (\backslash$$ $67,399\backslash )$ beginning on December $31,2024.$

$2.$ The fair value of the building on December $31,2024,$ is $\backslash (\backslash$$ $492,833\backslash ).$

$3.$ The building has an estimated economic life of $12$ years, a guaranteed residual value of $\backslash (\backslash$$ $9,500\backslash ),$ and an expected residual value of $\backslash (\backslash$$ $6,200\backslash ).$ Kimberly$-$Clark depreciates similar buildings on the straight$-$line method.

$4.$ The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor.

$5.$ Kimberly$-$Clark's incremental borrowing rate is $\backslash (8\backslash \%\backslash )$ per year. The lessor's implicit rate is not known by Kimberly$-$Clark.

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$($For calculation purposes, use $5$ decimal places as displayed in the factor table provided.$)$ Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years $2024,2025,$ and $2026.$ Kimberly$-$Clark's fiscal year$-$end is December $31.($List all debit entries before credit entries. 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 $0$ for the amounts. Round answers to $0$ decimal places e$.$g$.5,275.)$

Date

Account Titles and Explanation

Debit

Credit

$($To record the lease$)$

$($To record first lease payment$)$

$($To record amortization of the right$-$of$-$use asset$)$

$($To record amortization of the right$-$of$-$use asset$)$

Lease Liability

Interest Expense

$[]$