ABC Ltd acquired the use of mixer truck under a lease agreement which commences 1 October 2019. The lease contains the following key agreements:

Initial payment	An initial payment of $100,000 to be paid on 1 October 2019
Lease Payments	2 payments of $170,000 to be paid on 30 September 2020 and 30 September 2021
Transfer of ownership	Ownership of the mixer truck will transfer to ABC Ltd on 30 September 2021 after final payment.
Interest rate	Implicit interest rate is 12%

Additional information:

• ABC estimates the trucks useful life is 8 years
• Incremental borrowing rate is 14%
• Legal costs incurred $10,000 in setting up the lease

TASK:

Please prepare the journal entries in relation to the lease in the books of ABC Ltd for the year beginning 1 October 2019 to ending 30 September 2020. Narrations are required and show all workings. Hint: You may use present value tables provided at the end of this paper.

(15 Marks)

Please provide your answer to Question 5 in the space below (please use as much space as needed to answer the question):

Date	Account name	Debit $	Credit $