Ferrari Ltd agrees to sells a car to Maserati Ltd, a company that organised lease agreements, for $63,235 who will then lease the Car to Toto Ltd. On 1 July 2022, Toto Ltd acquired this Car from Maserati Ltd.

Maserati Ltd wrote a lease agreement, incurring initial direct costs of $600. The lease agreement contained the following items:

Initial payment on 1 July 2022 = $20,000

Payments on 1 July 2023 and 1 July 2024 = $20,000

Interest rate in lease is 3%.

The $20,000 payments each year include a $5,000 annual payment for insurance and maintenance. The vehicle had an expected economic life of 5 years. The expected fair value of the vehicle estimated by Maserati Ltd at 30 June 2025 was $22,000. Toto (lessee) Ltd also guarantees a residual value of $ 20,000.

Toto Ltds payment of insurance and maintenance is scheduled on 30th June each year. At 30 June 2025, Toto Ltd returned the vehicle to Maserati Ltd.

Required:

1. Prepare lease payment schedule for Travelling Ltd (lessee).
2. Provide journal entries in the records of Travelling Ltd (lessee) from 30 June 2023 to 1 July 2024.