Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2013. Manufacturers Southern has the option to renew the lease at the end of two years for an additional three years for $8,000 per quarter. Edison purchased the equipment from International Machines at a cost of $198,375.

Required:
1. Prepare appropriate entries for Manufacturers Southern from the commencement of the lease through March 31, 2013. Appropriate adjusting entries are made quarterly.
2. Prepare an amortization schedule for the term of thelease.

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Related Information: Lease term Lease renewal option for an additional 3 years at $8,000 per quarter Quarterly lease payments 2 years (8 quarterly periods) $15,000 at Jan. 1, 2013, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter. 5 years 8% Economic life of asset Interest rate charged by the lessor