Sam Ltd enters into a 5 years lease non-cancellable agreement with West Ltd on 1st July 2020. The lease is for an item of truck that has a fair value of $476912 at the inception of the lease. Sam Ltd’s incremental borrowing rate is 9% The truck is expected to have an economic life of 6 years, after which it will have an expected residual salvage value of $50,000. There is a purchase option that Sam Ltd will be able to exercise at the end of 5 year for $70,000. The rate of interest implicit in the lease is quoted as being 8%.
There are to be 5 annual payments of $120,000 being made at the end of each year along with an upfront payment of $30,000. The annual lease payment includes $20,000 representing payment to the lessor for the insurance and maintenance of the truck.


Required
a) Prepare the journal entries for the year ending 30 June 2021 and 30 June 2022 (For both Sam Ltd and West Ltd) Show the Lease receipts and payments schedule
b) Prepare the portion of the statement of financial position related to the leased asset and leased liability for the year ending 30 June 2021 and 30 June 2022 (For Sam Ltd)
c) Prepare the journal entries for the year ending 30 June 2025 (For Sam Ltd)

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