On 1 July 2021, Marcie Ltd leased a building from Sally Ltd. The following are details of the building and the lease contract:

• The building has a fair value of $187 000.
• Lease term is 5 years, useful life of the building is 6 years, and Marcie Ltd will leave the building at the end of the lease term.
• Lease payments are in arrears and will be paid on 30 June of each year, starting 30 June 2022, with $45,000 as the annual payment. Included in the annual payment is $3,000 to reimburse Sally Ltd for payment on the insurance policy.
• Residual value of the building at the end of the lease term is $15,000, with Marcie Ltd guaranteeing $11,000 of the residual value
• The interest rate implicit in the lease arrangement is 6%

In setting up the lease arrangement Marcie Ltd incurred $859, while Sally Ltd incurred $1 130.

Required:

a) Prepare all the necessary journal entries for Marcie Ltd (lessee) for the financial year 1 July 2021 - 30 June 2022 (PV tables are provided in the answer template) (12 marks)

b) Calculate the balance of the lease receivable on 1 July 2022 for Sally Ltd. (3 marks)