On January 1, 2022, Verona Inc. entered into a five-year equ…

On Jаnuаry 1, 2022, Verоnа Inc. entered intо a five-year equipment lease agreement with Quincy Inc. Quincy will pay Verоna $30,000 at the beginning of each year, starting on 1/1/2022. The equipment initially costs $500,000, and Verona estimates it has a 20-year useful economic life with no residual value. The lessor’s implicit rate is 10%, and the lease is correctly classified as an operating lease. If Verona’s fiscal year ends on December 31, the journal entry related to this lease that Verona Inc. needs to record at the end of 2022 should include the following: