On 30 June 2014 James Limited leased a machine (non-current asset) from Thomas Limited. The following represents the key terms of the lease agreement. Lease term 4 years Annual lease payment (payable in advance on 30 June each year) $37,500 Estimated useful life of the machine 6 years Estimated residual value at the end of the lease term $15,000 Residual value guaranteed by lessee 60% Interest rate implicit in the lease 7% The annual lease payments include executory costs of $5 000. Thomas Limited pays the executory costs on behalf of James Limited on 15 January every year. James Limited intends to return the asset to the lessor at end of the lease term. The costs incurred by Thomas Limited for the preparation of the lease were $7 000. The lease is classified as a finance lease in accordance with AASB 117 Leases. Required (a) Prepare the lease payments schedule for the lessee (show all workings) and prepare the journal entries in the books of the lessee from 30 June 2014 to 30 June 2015. (b) Prepare the lease receipt schedule for the lessor (show all workings) and prepare the journal entries in the books of the lessor from 30 June 2014 to 30 June 2015.

Note: round up to two (2) decimal places The relevant discount rates are:

Date

30/06/2014 1

30/06/2015 0.9346

30/06/2016 0.8734

30/06/2017 0.8163

30/06/2018 0.7629

30/06/2019 0.7130

30/06/2020 0.6663