The following facts pertain to a noncancelable lease agreement between Bramble Leasing Company and McKee Electronics, a lessee, for a computer system.

Inception dateOctober 1, 2017Lease term6yearsEconomic life of leased equipment6yearsFair value of asset at October 1, 2017$255,349Residual value at end of lease term-0-Lessor's implicit rate10%Lessee's incremental borrowing rate10%Annual lease payment due at the beginning ofeach year, beginning with October 1, 2017$53,300

The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs, which amount to $6,700 per year and are to be paid each October 1, beginning October 1, 2017. (This $6,700 is not included in the rental payment of $53,300.) 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 capital lease by the lessee and as a direct-financing lease by the lessor.

Problem 21-5 The following facts pertain to a noncancelable lease agreement between Bramble Leasing Company and McKee Electronics, a lessee, for a computer system. Inception date October 1, 2017 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at October 1, 2017 $255,349 Residual value at end of lease term 0 Lessor's implicit rate 10 % Lessee's incremental borrowing rate 10 % Annual lease payment due at the beginning of each year, beginning with October 1, 2017 $53,300 The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs, which amount to $6,700 per year and are to be paid each October 1, beginning October 1, 2017. (This $6,700 is not included in the rental payment of $53,300.) 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 capital lease by the lessee and as a directfinancing lease by the lessor. Annual Lease Interest (10%) on Unpaid Reduction of Lease Balance of Lease Date Payment/Receipt Liability] Receivable Liability] Receivable Liability/Receivable 10/01/17 $255,349 10/01/17 $ 53,300 $53,300 202,049 10/01/18 53,300 $20,205 33,095 168,954 10/01/19 53,300 16,895 36,405 132,549 10/01/20 53,300 13,255 40,045 92,504 10/01/21 53,300 9,250 44,050 48,454 10/01/22 53,300 4,846 48,454 0 $319,800 $64,451 $255,349 Your answer is correct. Assuming the lessor's accounting period ends on September 30, answer the following questions with respect to this lease agreement. (Round answers to a decimal places e.g. 58,971.) (1) What items and amounts will appear on the Iessor's income statement for the year ending September 30, 2018? $ 20205 Interest Revenue 4} (2) What items and amounts will appear on the lessor's balance sheet at September 30, 2018? Balance Sheet (Partial) September 30, 2018 Current Assets ., Lease Receivable $ 33095 Interest Receivable $ 20205 Noncurrent Assets .1 (3) What items and amounts will appear on the lessor's income statement for the year ending September 30, 2019? (4) What items and amounts will appear on the lessor's balance sheet at September 30, 2019? V Balance Sheet (Partial) September 30, 2019 Current Assets V Lease Receivable 36405 V V Interest Receivable 16895 Noncurrent Assets V Lease Receivable 132549 $(1) What items and amounts will appear on the lessor's income statement for the year ending December 31, 2017? 5051 v Interest Revenue (2) What items and amounts will appear on the lessor's balance sheet at December 31, 2017? Balance Sheet (Partial) December 31, 2017 Current Assets x Lease Receivable 8274 V Interest Receivable 5051 Noncurrent Assets X Lease Receivable 193775 (3) What items and amounts will appear on the lessor's income statement for the year ending December 31, 2018? 19378 $ Interest Revenue(3) What items and amounts will appear on the lessor's income statement for the year ending December 31, 2018? 19378 Interest Revenue (4) What items and amounts will appear on the lessor's balance sheet at December 31, 2018? V Balance Sheet (Partial) December 31, 2018 Current Assets X Lease Receivable 33922 X Interest Receivable 19378 Noncurrent Assets X Lease Receivable 159943