Gerbert Ltd enters into a finance lease with Hokiman Ltd on 1 July 2002 for an item of machinery that has a fair value at that date of $226,718. The lease is for a period of 4 years, with annual lease payments of $62,000 due on 30 June each year, the first payment to be made in 2003. There is a bargain purchase option of $15,000 available for Hokiman to exercise at the end of the lease period. The rate of interest implicit in the lease is 6 per cent. It cost Gerbert Ltd $190,000 to manufacture the machine. What are the entries in the books of Gerbert Ltd for 1 July 2002 and 30 June 2003 (round amounts to the nearest dollar)?
E) None of the given answers.

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The Answer of Gerbert Ltd enters into a finance lease with Hokiman Ltd on 1 July 2002 for an item of machinery that has a fair value at that date of $226,718. The lease is for a period of 4 years, with annual lease payments of $62,000 due on 30 June each year, the first payment to be made in 2003. There is a bargain purchase option of $15,000 available for Hokiman to exercise at the end of the lease period. The rate of interest implicit in the lease is 6 per cent. It cost Gerbert Ltd $190,000 to manufacture the machine. What are the entries in the books of Gerbert Ltd for 1 July 2002 and 30 June 2003 (round amounts to the nearest dollar)?
E) None of the given answers.

Gerbert Ltd Enters into a Finance Lease with Hokiman Ltd