Edison Leasing leased high-tech electronic equipment toManufacturers Southern on January 1, 2018. Edison purchased theequipment from International Machines at a cost of $139,107. (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 tablesprovided.)
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| Related Information: |
| Lease term | 2 years (8 quarterly periods) |
| Quarterly rental payments | $18,000 at the beginning of each period |
| Economic life of asset | 2 years |
| Fair value of asset | $139,107 |
| Implicit interest rate | 4% |
| (Also lessee’s incremental borrowing rate) |
Prepare a lease amortization schedule and appropriateentries for Edison Leasing from the beginning of the lease throughJanuary 1, 2019. Edison’s fiscal year ends December31.
1. 1/1/2018 Record the lease.
2. 1/1/2018 Record cash received
3. 4/1/2018 Record cash received.
4. 7/1/2018 Record cash received.
5. 10/1/2018 Record cash received.
6. 12/31/2018 Record interest receivable.
7. 1/1/2019 Record cash received.
