Blue Corporation agrees on January $1,2020,$ to lease equipment from Packers, Inc. for $3$ years. The lease calls for annual lease

payments of $$10,000$ at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and is

not a specialized asset. In addition, the economic life of the equipment is $10$ years, and the present value of the lease payments is less

than $90\%$ of the fair value of the equipment.

Prepare Blue' journal entries on January $1,2020($commencement of the operating lease$),$ and on December $31,2020.$ Assume the

implicit rate used by the lessor is $4\%,$ and this is known to Blue. $($Credit account titles are automatically indented when the

amount is entered. Do not indent manually. For calculation purposes, use $5$ decimal places as displayed in the factor table

provided and round final answers to $"0"$ decimal places, e$.$g$.5,275.$ Record journal entries in the order presented in the

problem.$)$

Click here to view factor tables.

Right$-$of$-$Use Asset

$($To record lease liability$)$

$($To record lease payment$)$