The following facts pertain to a non-cancellable lease agreement between Woodhouse Leasing Corporation and Vaughn Electronics Ltd., a lessee, for a computer system:

Inception date		October 1, 2020
Lease term		6 years
Economic life of leased equipment		6 years
Fair value of asset at October 1, 2020		$158,440
Residual value at end of lease term		0
Lessor's implicit rate		7.5%
Lessee's incremental borrowing rate		7.5%
Annual lease payment due at the beginning of each year, beginning October 1, 2020		$31,400

The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties about costs that have not yet been incurred by the lessor. Vaughn 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 properly as a capital lease by the lessee and as a direct financing lease by the lessor.

Date		Annual Lease Payment/ Receipt				Interest (7.5%) on Unpaid Obligation/ Net Investment				Reduction of Lease Obligation/ Net Investment				Balance of Lease Obligation/ Net Investment
10/01/20														$	158,440
10/01/20		$	31,400			$	0			$	31,400				127,040
10/01/21			31,400				9,528				21,872				105,168
10/01/22			31,400				7,888				23,512				81,656
10/01/23			31,400				6,124				25,276				56,380
10/01/24			31,400				4,229				27,171				29,209
10/01/25			31,400				2,191				29,209				0
		$	188,400			$	29,960			$	158,440

Part 1

Assuming that Vaughn Electronics accounting period ends on September 30, answer the following questions with respect to this lease agreement. (Round answers to 0 decimal places, e.g. 5,275.)

1. What items and amounts will appear on the lessees income statement for the year ended September 30, 2021?

2. What items and amounts will appear on the lessees balance sheet at September 30, 2021? 3. What items and amounts will appear on the lessees income statement for the year ended September 30, 2022?

4. What items and amounts will appear on the lessees balance sheet at September 30, 2022?