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Flint Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning...

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Accounting

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Flint Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020, Annual rental payments of 556,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 6% : Flint's incremental borrowing rate is 8%. Flint is unaware of the rate being used by the lessor. At the end of the lease, Flint has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Flint uses the straight-line method of depreclatlon on similar owned equipment. Click here to view factor tables. (a) (b) 6. Your answer is partially correct. Prepare the journal entries, that Flint should record on December 31. 2021. (Credit account tities are automatically indented when amount is entered. Donot indent manually. If no entry is required, select "No Entry" for the ocoount titles and enter o for the amounts.)

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