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Laura Leasing Company signs an agreement on January 1, 2020, tolease equipment to Kingbird Company. The following informationrelates to this agreement.

1.		The term of the non-cancelable lease is 3 years with no renewaloption. The equipment has an estimated economic life of 5years.
2.		The fair value of the asset at January 1, 2020, is $85,000.
3.		The asset will revert to the lessor at the end of the leaseterm, at which time the asset is expected to have a residual valueof $5,000, none of which is guaranteed.
4.		The agreement requires equal annual rental payments of $27,911to the lessor, beginning on January 1, 2020.
5.		The lessee’s incremental borrowing rate is 5%. The lessor’simplicit rate is 4% and is unknown to the lessee.
6.		Kingbird uses the straight-line depreciation method for allequipment.

Prepare an amortization schedule that would be suitable for thelessee for the lease term. (Round answers to 0 decimalplaces, e.g. 5,265.)

Prepare all of the journal entries for the lessee for 2020 and2021 to record the lease agreement, the lease payments, and allexpenses related to this lease. Assume the lessee’s annualaccounting period ends on December 31. (Credit accounttitles are automatically indented when amount is entered. Do notindent manually. Round answers to 0 decimal places, e.g. 5,265.Record journal entries in the order presented in theproblem.)