Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2013. International Machines manufactured the equipment at a cost of $200,000 and lists a cash selling price of $250,177. Appropriate adjusting entries are made quarterly.

Required:
1. Prepare appropriate entries for Manufacturers Southern to record the arrangement at its commencement, January 1, 2013, and on March 31, 2013.
2. Prepare appropriate entries for International Machines to record the arrangement at its commencement, January 1, 2013, and on March 31,2013.

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Related Information: Lease term Quarterly lease payments Economic life of asset Interest rate charged by the lessor 5 years (20 quarterly periods) $15,000 at Jan. 1, 2013, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter. years 8%