Worcester Chemical, Inc., leased a protein analyzer from Newton Lease. Inc. on September 30, 2021. Newton Lease manufactured the machine at a cost of $4.50 million. The five-year lease agreement calls for Worcester to make quarterly lease payments of $300,000, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2021. Newton Lease implicit interest rate is 8%. Amortization is recorded on a straight-line basis at the end of each fiscal year. The useful life of the equipment is five years.

1. Determine the price at which Newton Lease is selling the equipment (present value of the lease payments) at September 30, 2021.

2. What pretax amounts related to the lease would Worcester and Newton Lease report in its balance sheet at December 31, 2021?

3. What pretax amounts related to the lease would Worcester and Newton Lease report in its income statement for the year ended December 31, 2021?

4. What pretax amounts related to the lease would Worcester and Newton Lease report in its statement of cash flows for the year ended December 31, 2021?