Reference no: EM132702803

Universal Leasing leases electronic equipment to a variety of businesses. The company's primary service is providing alternate ?nancing by acquiring equipment and leasing it to customers under longeterm leases. Universal earns interest under these arrangements at a 12% annual rate. Universal purchased an electronic typesetting machine on December 31, 2020. for $104,000 and then leased it to Desktop. Inc.. a local publisher. The sixeyear operating lease term commenced January 1, 2021. and the lease contract speci?ed annual payments of $9,400 beginning December 31, 2021. and on each December 31 through 2026. The machine's estimated useful life is 15 years with no estimated residual value. The publisher had the option to terminate the lease af‘terfour years. At the beginning of the lease, there was no reason to believe the lease would be terminated.

Required:

Problem 1. Prepare the appropriate entries for Universal Leasing from the beginning of the lease through the end of 2021.