LEASES $-10$ POINTS

On December $31,20$Y$1,$ Lopez Company $($lessee$)$ signed a $2-$year, noncancelable lease for the use of manufacturing

equipment now owned by Zinger, Inc. $($lessor$).$ The lease expires December $31,20$ Y $3$ and has the following terms:

Annual contractual payments of $$28,231$ each December $31.$ The first payment is due December $31,20$ Y$1.$

No down payment; No purchase option.

The assel's FMV at $12/31/$Y$1$ is $$60,000.$

Lopez does not guarantee any residual value at $12/31/$Y$3.$

Lopez can borrow at $5\%$ per year for a $2-$year loan; Lopez is unaware of Zinger's $4\%$ desired return rate.

The estimated useful life of the asset is $3$ years.

REQUIRED

Use the following templates to show how the above lease transaction impacted Lopez's cash flows, income statement, and

balance sheet for the years $20$Y$1-20$Y$3.$ Round all amounts to the nearest whole dollar.

The impact on the balance sheet should reflect cumulative changes to the statement. These amounts will not necessarily

equal the December $31$ ending balances in the balance sheet accounts. Some lines might not have answers. List account

names or transaction descriptions in the first column and amounts in the remaining columns.

Check Figures:$$

$$55,118$ ROU Asset Beginning Balance

$$26,887-$ Lease Liability Balance End of Y$1$