Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2013. International Machines manufactured the equipment at a cost of $80,000 and lists a cash selling price of $112,080.

Required:
1. Show how International Machines determined the $15,000 quarterly lease payments.
2. Prepare appropriate entries for International Machines to record the lease at its commencement, January 1, 2013, and on March 31,2013.

Transcribed Image Text:

Related Information: Lease term Quarterly lease payments Economic life of asset Interest rate charged by the lessor 2 years (20 quarterly periods) $15,000 at Jan. 1, 2013, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter. 2 years 8%