Problem 3. Watt Financing leased a packing machine to Nuts Company. The noncancelable lease requires...
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Problem 3. Watt Financing leased a packing machine to Nuts Company. The noncancelable lease requires lease payments of $50,000 per year, payable in advance, over a five-year period. There is a bargain purchase option of $20,000 for Nuts. Watt's implicit interest rate (known to Nuts) is 11 percent. The lease term begins on January 1, 2019. The machine's economic life is 10 years with a cost of $200,000. The collectability of the lease payments is probable for the lessor. Instructions Provide the journal entries required on both Watt 's and Nuts' books to record the lease transaction through December 31, 2020
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