Prepare the lease receipts schedule for sherlock ltd

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On 1 July 2023, Sherlock Ltd leased a processing plant to Holmes Ltd. The plant was purchased by Sherlock Ltd on 1 July 2023 for its fair value of $348 942. The lease agreement contained the following provisions: Lease term 3 years Economic life of plant 5 years Annual rental payment, in arrears (commencing 30/6/24) $120 000 Residual value at end of the lease term $50 000 Residual guaranteed by lessee $30 000 Interest rate implicit in lease 8% The lease is cancellable only with the permission of the lessor. Holmes Ltd intends to return the processing plant to Sherlock Ltd at the end of the lease term. The lease has been classified as a finance lease by Sherlock Ltd.

Required

Question 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 2025.

Question 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 2025

Reference no: EM132735689

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