Lessee enters into a five-year lease of office space on January 1, and concludes that the agreement is an operating lease. Lessee pays initial direct costs of $5,000. The agreement provides the following:

Lease term - Five years, with the first payment due at lease commencement and the remainder annually at the lease anniversary date thereafter

Annual payments, beginning at lease commencement and annually thereafter - Commencement - $25,000

Year 2 - $26,000

Year 3 - $27,000

Year 4 -- $28,000

Year 5 -- $29,000

Discount rate - 4.0%

Present value (PV) of lease payments - $124,645

How do I go about creating table showing the impact on each year of Lessee's income statement and balance sheet. Prepare the journal entries for the Lessee at the commencement of the lease and at the end of year 1.