T24 Ltd (Lessor) has entered into an agreement to lease a customised equipment to BYO Ltd (Lessee). The lease agreements details are as follows:

Length of lease	3 years
Commencement date of lease agreement	1/7/2020
Quarterly lease payment, paid in arrears (at the end of each quarter)	$44,000
Included within the $44,000 quarterly lease payments is an amount of representing payment to T24 Ltd for the insurance and maintenance of the equipment	$4,000
Initial direct costs incurred (and paid) by BYO Ltd on 1/7/2020	$20,000
Commencement date of lease payment	30/9/2020
Estimated economic life of the equipment	15 years
Estimated residual value of the equipment at the end of its economic life	$20,000
Purchase option at the of the lease term available for BYO Ltd to exercise	$60,000
Market value of the equipment at the end of the lease term	$250,000
Interest rate implicit in the lease (per year)	8%
Lessees incremental borrowing rate (per year)	13%

Additional information:

If the equipment needs to be serviced or repaired, T24 Ltd is required to substitute a equipment of the same type. Otherwise, and other than on default by BYO Ltd, T24 Ltd cannot retrieve the equipment during the three-year period. At the end of the lease term, assume the transfer of asset from T24 Ltd to BYO Ltd.

BYO Ltd prepares financial statements at the end of every quarter.

Question

a) Prepare a schedule of lease payments for BYO Ltd, for the period from lease inception to the end of the agreement.

b) Provide all journal entries relevant to the lease contract in the accounts of BYO Ltd i) At inception of the lease (1/7/2020), including the initial direct costs. ii) At the end of the first reporting quarter (30/9/2020), including the

depreciation charges. iii) At the end of the lease contract, including the depreciation charges.