Riverbed Corporation agrees on January 1, 2020, to lease equipment from Packers, Inc. for 3 years. The lease calls for a

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Riverbed Corporation agrees on January 1, 2020, to lease
equipment from Packers, Inc. for 3 years. The lease calls for
annual lease payments of $20,500 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.
Assume that for Packers, Inc., the lessor, the collectibility of
the lease payments is probable, and the fair value and cost of the
equipment is $167,000.

Prepare Packers’ 2020 journal entries, assuming the company uses
straight-line depreciation and no salvage value.
(Credit account titles are automatically indented when
the amount is entered. Do not indent
manually.)