Lessee signs a $3-$year lease initiated on $1/1/20$X$1.$ Annual payments of $$16,081$ are due beginning $1/1/20$X$1.$ At the inception of the lease, the FMV of the asset is $$50,000.$ The lease contract specifies no BPO. The GRV is $$0$ and the expected FMV of the asset at the end of the lease is $$8,000,$ while the actual FMV of the asset at the end of the lease is $$5,000.$ The asset$$s useful life is $5$ years with no NSV$.$ The lessee$$s incremental borrowing rate is $10\%.$ The asset has an alternative use after the end of the lease.

Prepare all journal entries the lessee will make over the life of the lease.