Ray Ltd manufactures specialised 3D printers for both sale and lease. On 1 July 2020, Ray Ltd leased one of these printers to James Ltd, incurring $3,100 in costs to prepare and execute the lease document. The printer being leased cost Ray Ltd $106,300 to manufacture. The printer is expected to have an economic life of 6 years. The lease agreement details are as follows.

The lease term is for 5 years, starting on	1 July 2020
Annual lease payment, payable on 30 June each year	$32,000
Residual value guaranteed by James Ltd	18,000
Interest rate implicit in the lease	8%
Present value of $1 annuity over 5 years at 8% per annum	3.99271
Present value of $1 lump sum in 5 years at 8% per annum	0.68058

Required

1. Calculate the fair value of the leased printer at 1 July 2020. (1 mark)

2. Prepare the journal entries in the records of Ray Ltd at the inception of the lease. (3 marks)