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eal Corporation enters into a 7-year lease of equipment on December 31, 2019, which requires 7...

eal Corporation enters into a 7-year lease of equipment on December 31, 2019, which requires 7 annual payments of $41,100 each, beginning December 31, 2019. In addition, Teal guarantees the lessor a residual value of $18,400 at the end of the lease. However, Teal believes it is probable that the expected residual value at the end of the lease term will be $9,200. The equipment has a useful life of 7 years.

Prepare Teals' December 31, 2019, journal entries assuming the implicit rate of the lease is 10% and this is known to Teal.

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