On 1 July 2017, Eastern Mining Ltd leased a large truck from Fordy Ltd. The truck had a fair value of $245,000 on 1 July 2017. The lease agreement contained the following provisions:

• Lease term 4 years
• Annual lease payment in advance on 1 July each year $67,000.
• Expected residual value at end of the lease term $5,000.
• There is no residual value guaranteed by Eastern Mining Ltd.
• The interest rate implicit in lease 10%.
• The lease is non-cancellable.
• The expected economic life of the machine is 5 years.
• Eastern Mining Ltd intends to return the truck at the end of the lease term.
• Both companies apply AASB 16 Leases for the accounting treatment of lease transactions.
• Included in the payment an amount of $2,000 for the maintenance of truck

Required

1. Calculate the present value of lease payments (show all workings). (3 marks)
2. Prepare the lease schedule for the lessee (show all workings). (2 marks)
3. Prepare the journal entries for the lessee on 1 July 2017. (3 marks)
4. Prepare the journal entries for the lessee on 30 June 2018. (3 marks)