Supply Ltd entered into a non-cancellable five-year lease arrangement with Customer Ltd on 1 July 2022. The leased asset is a machine with an estimated useful life of six years and a salvage value of zero. There are to be five annual lease payments of $90,000, the first being made on 30 June 2023. Customer Ltd determined that this contract contains a lease. There is a bargain purchase option that Customer Ltd will be able and likely to exercise at the end of the lease term for $30,000. The implicit interest rate is 12%.

REQUIRED:

(1) What is the balance of lease liability the lessee should record on 1 July 2022? Show your calculations.

(2) Prepare the journal entries in the books of the lessee (Customer Ltd) from 1 July 2022 to 30 June 2023 (the end of the reporting period).