Pharoah Corporation owns equipment that cost $89,600 and has a useful life of 8 years with no salvage value. On January 1, 2025, Pharoah leases the equipment to Sheridan Inc. for one year for one rental payment of $16,800 on January 1. Assuming Sheridan (lessee) elects to use the short-term lease exception, prepare Sheridan's 2025 journal entry. (List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.