On January $1,2025,$ a machine was purchased for $$1,060,000$ by Marin Co$.$ The machine is expected to have an $8-$year life with

no salvage value. It is to be depreciated on a straight$-$line basis. The machine was leased to Cullumber Inc. for $3$ years on

January $1,2025,$ with annual rent payments of $$250,000$ due at the beginning of each year, starting January $1,2025.$ The

machine is expected to have a residual value at the end of the lease term of $$562,500,$ though this amount is unguaranteed.

Click here to view factor tables.

$($For calculation purposes, use $5$ decimal places as displayed in the factor table provided.$)$

$($a$)$

V Your answer is correct.

How much should Marin report as income before income tax on this lease for $2025?$

Income before income taxRecord the journal entries Cullumber would record for $2025$ on this lease, assuming its incremental borrowing rate is $9\%$

and the rate implicit in the lease is unknown. $($List all debit entries before credit 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 $0$ for the amounts. Round answers to $0$ decimal places, e$.$g$.5,275.$ Record journal entries in the order presented in the

problem.$)$

Account Titles and Explanation

Debit

Credit

Right$-$of$-$Use Asset

$($To record the lease$)$

$($To record lease payment$)$

$$

$$

$1$