Required

1. Prepare: (a) the lease payments schedule for Holmes Ltd (show all workings) (b) the journal entries in the records of Holmes Ltd for the year ended 30 June 2022.

2. Prepare: (a) the lease receipts schedule for Sherlock Ltd (show all workings) (b) the journal entries in the records of Sherlock Ltd for the year ended 30 June 2022. (LO3 and LO5)

Exercise 10.8 On 1 July 2020, Sherlock Ltd leased a processing plant to Holmes Ltd. The plant was purchased by Sherlock Ltd on contained the following provisions. July 2020 for its fair value of $541,850. The lease agreement Lease term 3 years Economic life of plant 5 years Annual rental payment, in arrears (commencing 30/6/2021) $174,0000 $104,000 Residual value at end of the lease term Residual guaranteed by lessee $70,000 Interest rate implicit in lease 7% The lease is cancellable only with the permission of the lessor Holmes Ltd intends to return the processing plant to the lessor at the end of the lease term. The lease has been classified as a finance lease by both the lessee and the lessor 1. (a) Prepare the lease payment schedule for the lessee. (Round factor values to 4 decimal places, e.g. 5,2752 and final answers to 0 decimal places, e.g. 5,275.) Holmes Ltd (lessee) Lease payments schedule Minimum lease Liability reduction * Interest Liability balance payments expense 1 July 2020 513769.2 30 June 2021 174000 30 June 2022 174000 30 June 2023 513769.2 Note The total of this column must equal the initial liability balance, which may require rounding the final interest revenue figure. By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instru ctor