Answer Happy

On 1 July 2022, Moose Ltd leased a plastic-moulding machine from Wolf Ltd. On 1 July 2022 the machine was in the records of Wolf Ltd at its fair value of $75 000. The lease agreement contained the following provisions. Lease term 4 years Annual rental payment, in advance on 1 July each year $20 750 Residual value at end of the lease term $7 000 Residual guaranteed by lessee $4 000 Interest rate implicit in lease 8% The machine will be depreciated by Moose Ltd on a straight-line basis. The expected useful life of the machine is 5 years. Moose Ltd intends to return the machine to the Wolf Ltd at the end of the lease term. The lease has been classified as a finance lease by Wolf Ltd. Included in the annual rental payment is an amount of $750 to cover the costs of maintenance and insurance paid for by the lessor. Initial direct costs for setting up the lease were incurred by both parties: $1 518 for Moose Ltd and $1 687 for Wolf Ltd. Required: 1. Prepare the lease payments schedule for the Moose Ltd. 2. Prepare the journal entries in the books of Moose Ltd for 1 July 2022 and for 30 June 2023. 3. Prepare the lease receipts schedule for the Wolf Ltd. 4. Prepare the journal entries in the books of Wolf Ltd for 1 July 2022 and for 30 June 2023.