Medusa Ltd enters into a non-cancellable 10-year lease with Lennox Ltd on 1 July 2013.The lease is for an item of equipment that at the inception of the lease has a fair value of $322 572 (the amount that Medusa paid for the asset on 1 July 2013).The equipment is expected to have a useful life of 12 years and the lease term is for 10 years.The lease contract includes a bargain purchase option of $4000 that Lennox Ltd will be able to exercise at the end of the 10-year lease.The lease payments will be made on 30 June each year,beginning 30 June 2014.The payments are to be $55 000 each year with $5000 of this being for executory costs to cover maintenance of the equipment.The maintenance will be carried out annually.The interest rate implicit in the lease is 9%.What are the entries in the books of Medusa Ltd for 1 July 2013 and 30 June 2014 (round amounts to the nearest dollar)?

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The Answer of Medusa Ltd enters into a non-cancellable 10-year lease with Lennox Ltd on 1 July 2013.The lease is for an item of equipment that at the inception of the lease has a fair value of $322 572 (the amount that Medusa paid for the asset on 1 July 2013).The equipment is expected to have a useful life of 12 years and the lease term is for 10 years.The lease contract includes a bargain purchase option of $4000 that Lennox Ltd will be able to exercise at the end of the 10-year lease.The lease payments will be made on 30 June each year,beginning 30 June 2014.The payments are to be $55 000 each year with $5000 of this being for executory costs to cover maintenance of the equipment.The maintenance will be carried out annually.The interest rate implicit in the lease is 9%.What are the entries in the books of Medusa Ltd for 1 July 2013 and 30 June 2014 (round amounts to the nearest dollar)?

Medusa Ltd Enters into a Non-Cancellable 10-Year Lease with Lennox