On 30 June 2024, Excel Ltd leased a vehicle from Superior Ltd. Superior Ltd had purchased the vehicle on that day for its fair value of 100,720. The lease agreement cost Excel Ltd $3,000 to have drawn up, contained the following information:

Lease term 4 years

Annual payment payable in advance 23,000

Annual payment payable in advance 1,900

Economic life of vehicle 6 years

Estimated residual value 3,000

Residual value at end of lease 28,000

Residual value guaranteed by Superior Ltd 15,000

Interest rate 7%

The lease is cancellable, but cancellation will incur a monetary penalty equivalent to 2 years rental payments. The annual payment of $1,900 is to cover for the costs of insurance and maintenance paid by the lessor. Excel Ltd has indicated that it is interested in acquiring the asset at the end of the lease.

Required:

Prepare for Excel Ltd the lease payment schedule and then show the journal entries for the years ended 30 June 2024 and 30 June 2025