Essay
Needham Industries leased manufacturing equipment from Burlington Leasing on January 1, 2018. Needham has the option to renew the lease at the end of two years for an additional three years. Needham is subject to a $135,000 penalty after two years if it fails to renew the lease. Burlington Leasing purchased the equipment from Springfield Machines at a cost of $250,177.
Required:
Prepare appropriate journal entries for Needham Industries from the beginning of the lease through March 31, 2018. Appropriate adjusting entries are made quarterly. Round your answers to the nearest whole dollar amounts.
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