Prepare the lease payments schedule for the Moose Ltd. Prepare the journal entries in the books of Moose Ltd for 1 July 2022 and for 30 June 2023. Prepare the lease receipts schedule for the Wolf Ltd.
On 1 July 2022, Moose Ltd leased a plastic-moulding machine from Wolf Ltd. On 1 July 2022 the machine was in the records of Wolf Ltd at its fair value of $75 000. The lease agreement contained the following provisions.
|
Lease term |
4 years |
|
Annual rental payment, in advance on 1 July each year |
$20 750 |
|
Residual value at end of the lease term |
$7 000 |
|
Residual guaranteed by lessee |
$4 000 |
|
Interest rate implicit in lease |
8% |
The machine will be
Included in the annual rental payment is an amount of $750 to cover the costs of maintenance and insurance paid for by the lessor. Initial direct costs for setting up the lease were incurred by both parties: $1 518 for Moose Ltd and $1 687 for Wolf Ltd.
Required:
- Prepare the lease payments schedule for the Moose Ltd.
- Prepare the
journal entries in the books of Moose Ltd for 1 July 2022 and for 30 June 2023. - Prepare the lease receipts schedule for the Wolf Ltd.
- Prepare the journal entries in the books of Wolf Ltd for 1 July 2022 and for 30 June 2023.
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