You are a financial accountant working at Knappa Foods Limited $($Knappa$).$ Knappa is a manufacturer and retailer of

food products. It has two manufacturing facilities in Australia $-$ one in Gosford, New South Wales, and one in Ballarat,

Victoria.

You are currently working on several tasks relating to preparing Knappa's financial statements for the year ended $30$

June $2024.$

You have identified the following issues for consideration:

When the financial controller was providing details on the employee share schemes at Knappa, it was

identified that share options granted to the production staff on $1$ July $2022$ were not accounted for in the

year ended $30$ June $2023$ financial statements.

On $1$ July $2022,1,000$ share options were granted to each of Knappa's $30$ production employees, on the

condition that the employees remain with the company for the next two years and that the share price

increases from $$26\mathrm{.}50$ per share on $1$ July $2022$ to $$35$ per share on $30$ June $2024.$ If the share price

target at $30$ June $2024$ is achieved, the share options can be exercised at any time over the subsequent

$12$ months $($ie up to $30$ June $2025).$

The fair value of each share option at the grant date was $$5\mathrm{.}60.$

You have obtained the following information:

This information was obtained at $30$ June $2023$; however, the appropriate accounting was not recognised.

The impact of the employee share scheme is considered material to the financial statements.

$2$ On $30$ June $2024,$ Knappa entered into a five$-$year lease arrangement for a shop.

The lessor gave permission for Knappa to install a wood$-$fired pizza oven on$-$site on the condition that it is

removed and the shop is restored at the end of the lease arrangement on $30$ June $2029.$

To encourage Knappa to agree to the lease arrangement, the lessor offered a one$-$off cash payment of

$$20,000,$ which was paid on $30$ June $2024.$

Additional information

Five annual lease payments of $$240,000,$ payable on $30$ June each year. The first payment will be

due on $30$ June $2025.$

The wood$-$fired pizza oven was installed on $30$ June $2024.$

The estimated costs to remove the wood$-$fired pizza oven and restore the shop is $$25,000$ on $30$

June $2029.$ The discounted amount of these estimated costs is correctly calculated at $$19,588$ at $30$

June $2024.$

The interest rate implicit in the lease is $8\%.$

Question

For the year ended $30$ June $2024,$ prepare the journal entries to account for items $1-2.$ Show all

workings. Ignore the impact of tax