Reference no: EM13301026

On 1 July 2010,cherry ltd acquired an item of plant for $31864.on the date,cherryltd eneterd into a lease agreement with hazel ltd in relation to the asset.according to the lease agreement hazel ltd agreed to pay $12000 immediately with a further two payments of $12000 on 1 july 2011 and 1 july 2012 at 30 june 2013,the asset is to be returned to the lessor and its residual value is expected to be $6000.hazel ltd has agreed to guarantee the expected residual value at 30 june 2013.all insurance and maintenance costs are to be paid by cherry ltd and are expected to amount to $2000 p.a.the costs of preparing the lease agreement amounted to $360.the interest rate implicit in the lease is 9%.the lease is classified as a finannce lease.plant is depreciable on a straight line basis.

a) prepare a schedule of lease receits for cherry ltd and the journals entries for the year ended 30 june 2011

B) do the same for hazel ltd

C) assume that hazel ltd guraranted a residual valve of only $4000.prepare a lease schedule for both cherry and hazel ltd

D) instead of acquiring the plant for $31864, assume that cherry ltd manfactured the plant at a cost of $29500 before entering into the lease agreement with hazel ltd.prepare a schedule of lease receipts for cherry ltd and the journal entries for the year ended 30 june 2011

E) assume that hazel ltd maufactured the plant itself at a cost of $29500 and sold the plant to cherry ltd for $31864.hazel ltd then leased it back under the original terms of lease,with hazel ltd guaranteeing a resdiual value of $4000.prepare a lease schedule for both cherry ltd and hazel ltd for the year ended 30 june 2011