On 1 July 2020, ABC Ltd leased a processing plant to XYZ Ltd. The plant was purchased by ABC Ltd on 1 July 2020 for its fair value of $467,112. The lease agreement contained the following provisions:

Lease Term (years)	3
Economic Life of Machine (years)	7
Annual rental payment, in arrears	$150,000
Residual value at end of the lease term	$90,000
Residual guaranteed by lessee	$60,000
Interest rate implicit in lease	6%
The lease is cancellable only with the permission of the lessor

XYZ Ltd intends to return the processing plant to ABC Ltd at thee end of the lease term. The lease has been classified as a finance lease by ABC Ltd:

Additional Information:

• Present value factor of the Ordinary Annuity at 6% for 3 years is 2.673
• The Present Value of a single payment at the end of 3 years at 6% is 0.84
• The Present Value of the Lease Payments is $451,326

Required:

1. Prepare the lease schedule for 2020 to 2023 (13 marks).

[Answer and show workings here]

b. Prepare all necessary journal entries for the financial years 2020 and 2022 from the lessees point of view assuming this is a finance lease (7 marks).

[Answer and show workings here]