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 $276,187. Both the lessee and the lessor elected the short-term lease option. Appropriate adjusting entries are made annually.
Related Information:
Lease term 1 years (4 quarterly periods)
Quarterly lease payments $30,000 at Jan. 1, 2013, and at Mar. 31, June 30, Sept. 30.
Economic life of asset 5 years
Interest rate charged by the lessor 8%
Required: 1. Prepare appropriate entries for Manufacturers Southern from the commencement of the lease through December 31, 2013.
2.Prepare appropriate entries for Edison Leasing from the commencement of the lease through December 31, 2013.