High Time Tours leased rock-climbing equipment from Adventures Leasing on January 1, 2018. High Time has the option to renew the lease at the end of two years for an additional three years for $8,000 per quarter. Adventures purchased the equipment at a cost of $198,375.

Related Information:

Lease term ............................................. 2 years (8 quarterly periods)

Lease renewal option for an additional ............ 3 years at $8,000 per quarter

Quarterly lease payments .... $15,000 at Jan. 1, 2018, and at Mar. 31, June 30,

....................................................... Sept. 30, and Dec. 31 thereafter

Economic life of asset ......................................................... 5 years

Interest rate charged by the lessor ................................................ 8%

Required:

1. Prepare appropriate entries for High Time Tours from the beginning of the lease through March 31, 2018.

Appropriate adjusting entries are made quarterly.

2. Prepare an amortization schedule for the term of the lease.