Lansing East Leased High-Tech Electronic Equipment from Davis Computing on January

Lansing East leased high-tech electronic equipment from Davis Computing on January 1, 2018. Davis Computing manufactured the equipment at a cost of $42,500.
$\begin{array}{ll}\text { Related Information: }\\\text { Lease term } & 2 \text { years ( } 8 \text { quarterly periods) } \\\text { Quarterly rental payments } & \$ 7,500 \text { at the beginning of each period } \\\text { Economic life of asset } & 2 \text { years }\\\text { Fair value of asset } & \$ 56,040 \\\text { Implicit interest rate } & 8 \% \\\end{array}$
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Required:
Round your answers to the nearest whole dollar amounts.
1. Show how Davis Computing determined the $7,500 quarterly rental payments.
2. Prepare appropriate journal entries for Davis Computing to record the lease at its beginning, January 1, 2018, and the second lease payment on April 1, 2018.

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