Journal Entries

Factor table required: Future value of $1($ Future Value of a single sum$)$ Table

Carla Vista Corporation agrees on January 1, 2025, to lease equipment from Sandhill, 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 Carla Vista' 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 5%, and this is known to Carla Vista. (Listall debitentries beforecredit 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 O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to "O" decimal places, e.g. 5,275. Record journal entries in the order presented in the problem) Click here to view factor tables. Date 1/1/25 1/1/25 12/31/25 Account Titles and Explanation Right-of- use Asset Lease Liability (To record lease liability) Lease Liability Cash (To record lease payment) Lease Expense Lease Liability Right-of- use Asset Debit Credit SUPPORT