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Newton Labs leased chronometers from Brookline Instruments on January 1, 2021. Brookline Instruments manufactured the chronometers at a cost of $200,000. The chronometers have a fair value of $260,000. Appropriate adjusting entries are made quarterly. (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.)

Related Information:
Lease term		5 years (20 quarterly periods)
Quarterly lease payments	$	14,547 at Jan. 1, 2021, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter.
Economic life of asset		6 years
Estimated residual value of chronometers at end of lease term	$	25,823
Interest rate charged by the lessor		8%

Required: 1. Prepare appropriate entries for Newton Labs to record the arrangement at its commencement, January 1, 2021, and on March 31, 2021. 2. Prepare appropriate entries for Brookline Instruments to record the arrangement at its commencement, January 1, 2021, and on March 31, 2021.

Requirement 1:

1	January 01, 2021	Right-of-use asset	242,622
		Lease payable		242,622
2	January 01, 2021	Lease payable	14,547
		Cash		14,547
3	March 31, 2021	Interest expense	4,562
		Lease payable	9,985
		Cash		14,547
4	March 31, 2021	Amortization expense	12,131
		Right-of-use asset		12,131

Requirement 2:

1	January 01, 2021	Lease receivable	?
		Cost of goods sold	?
		Sales revenue		242,622
		Equipment		200,000
2	January 01, 2021	Cash	14,547
		Lease receivable		14,547
3	March 31, 2021	Cash	14,547
		Lease receivable	?
		Interest revenue	?

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