Abc ltd is looking to purchase water tanks and lease them to a customer (Def Limited. Cost of water tanks: $700,000 (10 tanks) Term of lease: 60 months (5 years) Monthly customer repayments: $15,000 Total interest expense over the term of agreement is $200,000 (assume straight line over whole term) Ownership of water tanks will transfer over to the customer at the end of the 5-year lease term.

Questions 1. What are the initial accounting journal entries at the start of the lease agreement for both Abc and Def Limited?

2. What are the accounting journals entries for both Abc and Def Limited after one month of the lease agreement?

Answer the questions in Excel format.