Universal Leasing leases electronic equipment to a variety of businesses. The companys primary service is providing alternate financing by acquiring equipment and leasing it to customers under long-term sales-type leases. Universal earns interest under these arrangements at a 10% annual rate. The company leased an electronic typesetting machine it purchased for $32,900 to a local publisher, Desktop Inc., on December 31, 2020. The lease contract specified annual payments of $7,605 beginning January 1, 2021, the beginning of the lease, and each December 31 through 2022 (three-year lease term). The publisher had the option to purchase the machine on December 30, 2023, the end of the lease term, for $16,100 when it was expected to have a residual value of $20,100, a sufficient difference that exercise seems reasonably certain. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Show how Universal calculated the $7,605 annual lease payments for this sales-type lease. 2. Prepare an amortization schedule that describes the pattern of interest revenue for Universal Leasing over the lease term. 3. Prepare the appropriate entries for Universal Leasing from the beginning of the lease through the end of the lease term.

Required 1:

Show how Universal calculated the $7,605 annual lease payments for this sales-type lease. (Round your intermediate and final answers to the nearest whole dollar amount. Enter decreases with a minus sign.)

Required 2:

Prepare an amortization schedule that describes the pattern of interest revenue for Universal Leasing over the lease term. (Round your intermediate and final answers to the nearest whole dollar amount. Enter all amounts as positive values.)

Required 3:

Prepare the appropriate entries for Universal Leasing from the beginning of the lease through the end of the lease term. (Round your intermediate and final answers to the nearest whole dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Jan 1, 2021: Record the lease

2. Jan 1, 2021: Record cash received.

3. Dec 31, 2021: Record cash received.

4. Dec 31, 2022: Record cash received.

5. Dec 30, 2023: Record cash received.

Amount to be recovered Amount to be recovered through periodic lease payments Lease payments at the beginning each of three years $ 7,605 Lease Amortization Schedule Effective Decrease in Payments Interest Balance Date Outstanding Balance 01/01/2021 12/31/2021 12/31/2022 12/31/2023 Total