Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2013. Edison purchased the equipment from International Machines at a cost of $250,177. Appropriate adjusting entries are recorded at the end of each quarter.

Related Information:

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

Quarterly lease payments .....$15,000 at Jan. 1, 2013, and at Mar. 31,

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

Economic life of asset .......2 years

Residual value of asset at end of lease term . $161,803

Interest rate charged by the lessor ...8%

Required:

1. Show how Edison determined the $15,000 quarterly lease payments.

2. Prepare appropriate entries for Edison to record the lease at its commencement, January 1, 2013, and on March 31, 2013.