Problem $2$

On January $1,2025,$ Southem Industries entered into a lease for cutting$-$edge electronic

equipment from Horizon Leasing. Horizon obtained the equipment from Worldwide Machines at

a purchase price of $$89,664.$

Lease term

Quarterly rental payments

Economic life of asset

Fair value of asset

Implicit interest rate

$2$ years $(8$ quarterly periods$)$

$$12,000$ at the beginning of each period

$2$ years

$$89,664$

$8\%$

$($Also lessee's incremental borrowing rate$)$

Required: Prepare a lease amortization schedule and appropriate entries for Southern from the

beginning of the lease through January $1,2026.$ Amortization is recorded at the end of each fiscal

year $($December $31)$ on a straight$-$line basis.