The following facts pertain to a non-cancelable lease agreement between Alschuler Leasing Company and McKee Electronics, a lessee, for a computer system.

Commencement date	October 1, 2020
Lease term	6 years
Economic life of leased equipment	6 years
Fair value of asset at October 1, 2020	$313,043
Book value of asset at October 1, 2020	$280,000
Residual value at end of lease term	–0–
Lessor's implicit rate	8%
Lessee's incremental borrowing rate	8%
Annual lease payment due at the beginning of each year, beginning with October 1, 2020	$62,700

The collectibility of the lease payments is probable by the lessor. 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 has been prepared correctly for use by both the lessor and the lessee in accounting for this lease. The lease is to be accounted for properly as a finance lease by the lessee and as a sales-type lease by the lessor.

Date	Lease Payment/ Receipt	Interest (8%) on Unpaid Liability/ Receivable	Reduction of Lease Liability/Receivable	Balance of Lease Liability/Receivable
10/01/20				$313,043
10/01/20	$162,700		$162,700	1250,343
10/01/21	$162,700	$20,027	1142,673	1207,670
10/01/22	$162,700	116,614	1146,086	1161,584
10/01/23	$162,700	112,927	1149,773	1111,811
10/01/24	$162,700	118,945	1153,755	1158,056
10/01/25	$162,700	114,644	1158,056	1–0–
	$376,200	$63,157	$313,043

Instructions

a.    Assuming the lessee's 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 ending 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 ending September 30, 2022?
• What items and amounts will appear on the lessee's balance sheet at September 30, 2022?

b.    Assuming the lessee's accounting period ends on December 31, 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 ending December 31, 2020?
• What items and amounts will appear on the lessee's balance sheet at December 31, 2020?
• What items and amounts will appear on the lessee's income statement for the year ending December 31, 2021?
• What items and amounts will appear on the lessee's balance sheet at December 31, 2021?