On 1 July 2020, Sherlock Ltd leased a processing plant to Holmes Ltd. The plant was purchased by Sherlock Ltd on 1 July 2020 for its fair of $467112. The lease agreement contained the following provisions.

Lease term 3 years

Economic life of plant 5 years

Annual rental payment, in arrears (commencing 30/6/21) $150000

Residual value at end of the lease term $90000

Residual guaranteed by lessee. $60000

Interest rate implicit in lease. 7%

The lease is cancellable only with the permission of the lessor

Holmes Ltd intends to return the processing plant to Sherlock Ltd at the end of the lease term. The lease has been classified as a finance lease by Sherlock Ltd.

Required

1- prepare the lease payments schedule for Holmes Ltd

2- The journal entries in the records of Holmes Ltd for the year ended 30 June 2022.

3- prepare the lease receipts schedule for Sherlock Ltd

4- the journal entries in the records of Sherlock Ltd for the year ended 30 June 2022.