Finance lease — financier lessor    LO3, 5 On 1 July 2019, Safe Ltd acquired a new car. The manager of Safe Ltd, Jack Safe, went to the local car yard, House Autos, and discussed the price of a new Racer Special with Denzel House. Jack and Denzel agreed on a price of $37 876. As House Autos had acquired the vehicle from the manufacturer for $32 000, Denzel was pleased with the deal. On discussing the financial arrangements in relation to the car, Jack decided that a lease arrangement was the most suitable. Denzel agreed to arrange for Washington Ltd, a local finance company, to set up the lease agreement. House Autos then sold the car to Washington Ltd for $37 876. Washington Ltd wrote a lease agreement, incurring initial direct costs of $534 in the process. The lease agreement contained the following clauses. Initial payment on 1 July 2019 $13 000 Payments on 1 July 2020 and 1 July 2021 $13 000 Interest rate implicit in the lease 6% The lease agreement also specified for Washington Ltd to pay for the insurance and maintenance of the vehicle, the latter to be carried out by House Autos at regular intervals. A cost of $3000 per annum was included in the lease payments to cover these services. Jack was concerned that the lease be considered an operating lease for accounting purposes. To achieve this, the lease agreement was worded as follows. • The lease was cancellable by Safe Ltd at any stage. However, if the lease was cancelled, Safe Ltd agreed to lease, on similar terms, another car from Washington Ltd. • Safe Ltd was not required to guarantee the payment of any residual value. At the end of the lease term, 30 June 2022, or if cancelled earlier, the car would automatically revert to the lessor with no payments being required from Safe Ltd. The vehicle had an expected economic life of 6 years. The expected fair value of the vehicle at 30 June 2022 was $12 000. Because of concern over the residual value, Washington Ltd required Jack to sign another contractual arrangement separate from the lease agreement which gave Washington Ltd the right to sell the car to Safe Ltd if the fair value of the car at the end of the lease term was less than $10 000. Costs of maintenance and insurance paid by Washington Ltd to House Autos over the years ended 30 June 2020 to 30 June 2022 were $2810, $3020 and $2750. At 30 June 2022, Jack returned the vehicle to Washington Ltd. The fair value of the car was determined to be $9000. Washington Ltd invoked the second agreement. With the consent of Safe Ltd, Washington Ltd sold the car to House Autos for a price of $9000 on 5 July 2022, and invoiced Safe Ltd for $1000. Safe Ltd subsequently paid this amount on 13 July 2022. Required Assuming the lease is classified as a finance lease for the perspective of Washington Ltd, prepare: 1. a schedule of lease payments for Safe Ltd 2. journal entries in the records of Safe Ltd for the years ended 30 June 2020, 30 June 2021 and 30 June 2022 3. a schedule of lease receipts for Washington Ltd 4. journal entries in the records of Washington Ltd for the years ended 30 June 2020, 30 June 2021 and 30 June 2022.