Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2024. International Machines manufactured the equipment at a cost of $100,000. Manufacturers Southern's fiscal year ends December 31.

Note: Use tables, Excel, or a financial calculator.

1. Show how international Machines determined the $16,500 quarterly lease payments
2. Prepare appropriate entries for International Machines to record the lease at its beginning, January 1, 2024, and the second lease payment on April 1, 2024.

Related Information: Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate 2 years (8 quarterly periods) $16,500 at the beginning of each period 2 years $123,288 8%