On 30 June 2015, Rahway Prison Ltd arranged to lease equipment from Cheapa Finance Co. Limited. At the inception of the lease, the equipment had a fair value of $1 100 000, an estimated useful economic life of 10 years, and estimated scrap value of $Nil. Rahway Prison Ltd intends to purchase the equipment at the end of the lease term for its guaranteed residual value. The lease term is 7 years and payments of $237 692 are due in advance on 30 June each year. The guaranteed residual value of the equipment at the end of the lease term is $200 000. If the lease is cancelled by Rahway Prison Ltd a cancellation payment of $500 000 applies. The interest rate implicit in the lease is 24% p.a.

Required

Prepare the lease repayment schedule.

On the basis that the lease is a finance lease, prepare the journal entries of Rahway Prison in respect of all years.