Question

Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2016. Edison purchased the equipment from International Machines at a cost of $125,370. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Related Information:
Lease term	2 years (8 quarterly periods)
Quarterly rental payments	$16,500 at the beginning of each period
Economic life of asset	2 years
Fair value of asset	$125,370
Implicit interest rate	6%
(Also lessee’s incremental borrowing rate)

Required:

Prepare a lease amortization schedule for the term of the lease. Also record the appropriate entries for Manufacturers Southern from the inception of the lease through January 1, 2017. Depreciation is recorded at the end of each fiscal year (December 31) on a straight-line basis.

Record the appropriate entries for Manufacturers Southern from the inception of the lease through January 1, 2017. Depreciation is recorded at the end of each fiscal year (December 31) on a straight-line basis. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1