Accounting for lease On 1 July 20X1, XYZ Ltd leased a plastic-moulding machine from ABC Ltd. The machine costs ABC Ltd $65,000 to manufacture and had a fair value of $84.561 on 1 July 20X1. The lease term is for 3 years and some of the key terms of the lease are as follows: Annual rental payment, with the first payment on 30 June 20X2 Residual value at end of the lease term Residual guaranteed by lessee Interest rate implicit in lease Expected useful life of the machine Legal expense for ABC Ltd to prepare the lease contract The amount to cover annual maintenance and insurance costs. The lease is cancellable only with the permission of the lessor $30,000 $8,000 nit 6% 8 years $1,200 $2,000 XYZ Ltd classifies the lease as a finance lease. Assume depreciation method is straight-line for all calculations. Appendix A. Present value of $1 in n periods at 1% interest ratesAppendix B. Present value of an annuity of $1 per period at 1 % for n period at 1% interest rates period period 1 2 3 0.8900 0.8396 6% 7% 0.9434 0.9346 0.9259 0.9174 0.8734 0.8573 0.8417 0.8265 0.8163 0.7938 0.7722 0.7513 8% 9% 10% 6% 7% 8% 9% 10% 0.9091 12 0.9434 0.9346 0.9259 0.9174 0.9091 2 1.8334 1.8080 1.7833 1.7591 1.7355 4 0.7921 0.7629 0.7350 0.7084 0.6830 5 0.7473 0.7130 0.6806 0.6499 0.6209 6 7 8 00 0.7050 0.6663 0.6302 0.5963 0.5645 0.6651 0.6228 0.5835 0.5470 0.5132 0.6274 0.5820 0.5403 0.5019 0.4665 34 5698 2.6730 2.6243 2.5771 2.5313 2.4869 3.4651 3.3872 3.3121 3.2397 3.1699 4.2124 4.1002 3.9927 3.8897 3.7908 4.9173 4.7665 4.6229 4.4859 4.3553 7 5.5824 5.3893 5.2064 5.0330 4.8684 6.2098 5.9713 5.7466 5.5348 5.3349 Round all your answers to the nearest dollar amount. If you believe no journal entry is required, select NULL for the account name, NA for the Dr or Cr, and enter 0 for the amount. Do not leave the amount blank. Do not enter dollar ($) signs or commas (i.e. enter 10000 not $10,000). NB: You must use the discount factors provided and not any others when calculating the present value. The description may be missing 2 the Dr or Cr, and enter O for the am Do not enter dollar ($) signs or commas (i.e. enter 10000 not $10,000). NB: You must use the discount factors provided and not any others when calculating the present value. The description may be missing from some of the journal entries below. This is intentional. REQUIED: a. Prepare the journal entries in the books of XYZ Ltd for the year ended 30 June 20X2 and 30 June 20X4. 1 July 20X1 30 June 20X2 Lease liability Cash = Dr Cr Dr Cr A Dr Cr Dr Cr = 30 June 20X2 Dr Cr Dr Lease receivable Cr Dr Cr 30 June 20X4 Dr 4 30 June 20X4 Lease liability Dr Cr Cash Dr Cr 49 Accumulated depreciation Dr Cr Dr Cr b. Prepare the journal entries in the books of ABC Ltd for the year ended 30 June 20X2 and 30 June 20X5. 1 July 20X1 Cost of goods sold Dr Dr