I don't know how to calculate the interest expenses like these steps , and the $40000 is calculated by the $41500-$1500 ? Thanks 

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Exercise 10.3 e Accounting by lessee 1. PV of LP = $40 000 + $40 000 x 2.5771 [T2 8% 3y] + = $40 000 + $103 084 On 1 July 2019, True Ltd leased a plastic-moulding machine from Grit Ltd. The machine cost Grit Ltd $130 000 to manufacture and had a fair value of $154 109 on 1 July 2019. The lease agreement contained the following provisions. = $143 084 Lease term 4 years $41 500 $15 000 Annual rental payment, in advance on 1 July each year TRUE LTD + Residual value at end of the lease term Lease payments schedule Residual guaranteed by lessee Interest rate implicit in lease The lease is cancellable only with the permission of the lessor. nil Interest 8% Lease expense Reduction in Balance of paymentsdi (8%) liability + liability + |1 July 2019 |1 July 2020 1 July 2021 1 July 2022 The expected useful life of the machine is 6 years. True Ltd intends to return the machine to the Grit Ltd at the end of the lease term. Included in the annual rental payment is an amount of $1500 to cover the costs of maintenance and insurance paid for by the lessor. $ 31 753 34 294 103 084 71 331 40 000 8 247 5 706 2 963 40 000 37 037 40 000 37 037 Required 1. Prepare the lease payments schedule for the True Ltd (show all workings). 2. Prepare the journal entries in the books of True Ltd for the year ended 30 June 2020. (LO3) $ 120 000 $ 16 916 +$ 103 084 J PpE Exercise 10.3 e Accounting by lessee 1. PV of LP = $40 000 + $40 000 x 2.5771 [T2 8% 3y] + = $40 000 + $103 084 On 1 July 2019, True Ltd leased a plastic-moulding machine from Grit Ltd. The machine cost Grit Ltd $130 000 to manufacture and had a fair value of $154 109 on 1 July 2019. The lease agreement contained the following provisions. = $143 084 Lease term 4 years $41 500 $15 000 Annual rental payment, in advance on 1 July each year TRUE LTD + Residual value at end of the lease term Lease payments schedule Residual guaranteed by lessee Interest rate implicit in lease The lease is cancellable only with the permission of the lessor. nil Interest 8% Lease expense Reduction in Balance of paymentsdi (8%) liability + liability + |1 July 2019 |1 July 2020 1 July 2021 1 July 2022 The expected useful life of the machine is 6 years. True Ltd intends to return the machine to the Grit Ltd at the end of the lease term. Included in the annual rental payment is an amount of $1500 to cover the costs of maintenance and insurance paid for by the lessor. $ 31 753 34 294 103 084 71 331 40 000 8 247 5 706 2 963 40 000 37 037 40 000 37 037 Required 1. Prepare the lease payments schedule for the True Ltd (show all workings). 2. Prepare the journal entries in the books of True Ltd for the year ended 30 June 2020. (LO3) $ 120 000 $ 16 916 +$ 103 084 J PpE

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