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On 1 July 2023, Sherlock Ltd leased a processing plant to Holmes Ltd

Accounting

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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:

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

1. Prepare:

1. the lease payments schedule for Holmes Ltd (show all workings)
2. the journal entries in the records of Holmes Ltd for the year ended 30 June 2025.

2. Prepare:

1. the lease receipts schedule for Sherlock Ltd (show all workings)
2. the journal entries in the records of Sherlock Ltd for the year ended 30 June 2025.