Indiana Ltd decided to lease from Jones Ltd a car had a fair value at 30 June 2019 of $38960. The lease agreement contained the following provisions.

Lease term 3 years

Annual rental payments (commercing 30/06/19) $11200

Guaranteed residual value (expected fair value at end of lease term) $12000

The expected useful life of the car is 5 years. At the end of the 3 year lease term, the car was returned to Jones Ltd, Which sold it for $10000. The annual rental payments include an amount of $1200 to cover the cost of maintenance and insurance arranged and paid for by Jones Ltd.

Required

1- Prepare the journal entries for Indiana Ltd from 30 June 2019 to 30 June 2022.

2- assuming that the lease is a finance lease from the perspective of Jones Ltd, prepare the journal entries for Jones Ltd from 30 June 2019 to 30 June 2022.

3- Assuming that the lease is an operating lease from the perspective of Jones Ltd, prepare the journal entries for Jones Ltd from 30 June 2019 to 30 June 2022.