The Association of Western Agricultural Producers leases space in an office complex and has recently signed a new, five-year lease, at the rate of \(\$ 4,000\) per month. However, the lessor offered six months "free" rent at the beginning of the lease as an inducement for the Association to sign the lease agreement.

The lease agreement was signed on 1 October 20X1; the lease will commence on 1 November 20X1. The Association has a 31 December fiscal year-end. Rent is due on the first day of each month.

Required:

1. Prepare journal entries for the first, sixth, and seventh months of the lease. Assume that financial statements are prepared monthly.

2. What amounts would be shown on the association's income statement and statement of financial position for this lease as of 31 December 20X2?