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On January 1,2020, Oriole Company leased equipment to Flynn Corporation. The following information pertains to...

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Accounting

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On January 1,2020, Oriole Company leased equipment to Flynn Corporation. The following information pertains to this lease. 1. The term of the non-cancelable lease is 6 ycars. At the end of thelease term, Flynn has the option to purchase the equipment for $2,000, while the expected residual valuc at the end of the lease is $9,000. 2. Equal rental payments are due on January 1 of each vear, beginning in 2020. 3. The fair value of the equipment on January 1,2020 , is $185,000, and its cost is $120,000. 4. The equiprnent has an cconomic life of 8 years. Flym depreciates all of its equipment on a straight-line basis. 5. Oriole set the annual rental to ensure a 6% rate of return. Flyn's incremental borrowing rate is B%, and the implicit rate of the lessor is unknown. 6. Collectibility of lease payments by the lessor is probable. Both the lestor and the lessee's sccounting periods end on December 31. Prepare all the necessary journal entries for Oriole for 2020. (Credit occount titles are automatically indented when the amount is entered. Do not indent manually, Round onswers to 0 decimal places, e.g. 5,275 . Record journal entries in the order presented in the problem.)

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