On 1 July 2015, Clementi Ltd leased a processing plant to Jurong Ltd. The plant was purchased by Clementi Ltd on 1 July 2015 for its fair value of $895,304. The lease agreement contained the following provisions:

Lease term

Economic life of plant

Annual rental payment, in arrears (commencing 30/6/2016)

Residual value at end of the lease term Residual guaranteed by lessee

Interest rate implicit in lease

The lease is cancellable only with the permission of the lessor.

3 years

4 years $300,000

$180,000 $100,000 7%

The $300,000 annual rental payment include $20,000 to reimburse Clementi Ltd for the maintenance of the plant.

Jurong Ltd intends to return the processing plant to the lessor at the end of the lease term.

Required

1. a)Prepare the lease payment schedule for the lessee (show all workings).
2. (6 marks)
3. b)Write the journal entries in the records of the lessee for the year ending 30 June 2016 ONLY.
4. (2 marks)
5. c)Prepare the lease receipt schedule for the lessor (show all workings).
6. (6 marks)
7. d)Write the journal entries in the records of the lessor for the year ending 30 June

2016 ONLY