Due to increased demand for hire car in Australia, Coastal Hire Cars Ltd leased limousine from a

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Question:

Due to increased demand for hire car in Australia, Coastal Hire Cars Ltd leased limousine from a car dealer Rolls Royce ltd. Rolls Royce acquired the Limousine at the cost of $192,000. The bus will be painted with the Coastal Hire Car Ltd's logo and advertising, and the cost of repainting the Limousine to make it suitable for another owner four years later is estimated to be $52,000. Coastal Hire Ltd has not made any commitment to the lessor to purchase it, but they plan to keep the Limousine after the lease. The terms of the lease are as follows:

Date of entering lease : 1 July 2023.
Duration of lease : 4 years
Life of leased asset: 5 years, after which it will have no residual value.
Lease payments: $112,000 at the end of each year.
The interest rate implicit in the lease: 10 per cent.
Unguaranteed residual: $62,000.
The fair value of the Limousine at the inspection of the lease: $397,375.

Required :

provide journal entries to account for the lease transaction in the book of the lessor, Rolls Royce Ltd, at 1 July 2023 and 30 June 2024.

provide journal entries to account for the lease transaction in the books of the lessee, Coastal Hire Cars Ltd, at 1 July 2023 and 30 June 2024.

On 30 June 2027, Coastal Hire Car Ltd pays the residual of $62,000 and purchases the Limousine. Prepare all journal entries in the books of Coastal Hire Cars Ltd for 30 June 2027 in relation to the termination of the lease and the purchase of the limousine.