A lease with the following terms:

$$ Lease period: $5$ years, beginning January $1,2016.$ Non$-$cancelable.

$$ Rental amount: $$65,000$ payable annually in advance $($at the beginning of year$)$; includes $$5,000$ executory costs.

$$ The first lease payment is made on January $1,2016,$ and four subsequent payments are made on each December $31($Balance Sheet date$).$

$$ Estimated economic life of equipment: $5$ years.

$$ Expected residual value: none.

$$ Both implicit and incremental rates: $10\%$

Required:

On behalf of Lessee and Lessor,

$($a$)$ Prepare the lease payment schedule to show the lease liabilities and interest expense over the lease period.

$($b$)$ Provide all journal entries in the year of $2016.$

$($c$)$ Show statement of financial position $($extract$)$ at $31$ December $2016$ in respect of lease.