Prepare the year$-$end adjusting journal entries made by Wagner Inc. for fiscal

$(120\mathrm{.}9$ The following facts pertain to a non$-$cancellable lease agreement between Woodhouse Leasing

Sorporation and McKee Electronics Ltd$.,$ a lessee, for a computer system:

The collectibility of the lease payments is reasonably predictable, and there are no important uncer$-$

tainties about costs that have not yet been incurred by the lessor. McKee Electronics Ltd$.,$ the lessee,

assumes responsibility for all repairs and maintenance costs, which amount to $$2,500$ per year and are

to be paid each October $1,$ beginning October $1,2020,$ by the lessee directly to the suppliers. The asset

will revert to the lessor at the end of the lease term. The straight$-$line depreciation method is used for all

equipment.

The following amortization schedule for the lease obligation has been prepared correctly for use by

both the lessor and the lessee in accounting for this lease using ASPE. The lease is accounted for properiy

as a capital lease by the lessee and as a direct financing lease by the lessor.

Instructions

Answer the following questions, rounding all numbers to the nearest dollar.

a$.$ Assuming that McKee Electronics' accounting period ends on September $30,$ answer the following

questions with respect to this lease agreement.

What items and amounts will appear on the lessee's income statement for the year ended

September $30,2021?$

What items and amounts will appear on the lessee's balance sheet at September $30,2021?$

What items and amounts will appear on the lessee's income statement for the year ended

September $30,2022?$

What items and amounts will appear on the lessee's balance sheet at September $30,2022?$

b$.$ Assuming that McKee Electronics' accounting period ends on December $31,$ answer the same

questions as in part $($a$)$ above for the years ended December $31,2020$ and $2021.$

P$20\mathrm{.}10$ Assume the same information as in $20\mathrm{.}9.$