Response to the following problem:
Driver Ltd signs a five year lease agreement with Bakewell Ltd on 1st July 2019. The lease isfor new equipment which has at the star of thelease a fair value of $341,755. The equipment isestimated to have a useful life of seven years with no residual value at the end of that time. Driver Ltdhas a bargain purchase option which can be taken up at the end of the lease term for $68,000.The equipment originally cost Bakewell Ltd $272,000. There are five annual lease payments of$85,000 starting on 30th June 2020. Within the $85,000 is an executory payment for insurance, repairsand maintenance of $8,500. A straight-line basis of depreciation has been adopted for the equipment.The rate of interest implicit in the lease is 9 per cent.
Required;Prepare the Journal entries for the years ending 30 June 2020 and 30 June 2021 in the books of:(a) Bakewell Ltd and (b) Driver Ltd.