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Author Question: A city acquires equipment on January 1, 2013 by means of a capital lease agreement. The agreement ... (Read 39 times)

lindiwe

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  • Posts: 577
on: Jul 5, 2018
A city acquires equipment on January 1, 2013 by means of a capital lease agreement. The agreement calls for paying the leasing company 300,000 in three 100,000 annual payments, starting December 31, 2013 .
 
  The present value of the three lease payments, using a 6 interest rate, is 267,300 . The city will make the lease payments from the General Fund. What journal entry should the city make on January 1, 2013 in the Fund?
   a. debit expenditures - capital outlay; credit other financing sources, for 300,000
   b. debit expenditures - capital outlay; credit other financing sources, for 267,300
   c. debit capital assets; credit capital leases payable, for 300,000
   d. debit expenditures - capital outlay; credit capital leases payable, for 267,300

Question 2

No entries are made in the Posting Reference column in a two-column journal when journalizing.
 a. True
   b. False
   Indicate whether the statement is true or false


coreycathey

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Reply #1 on: Jul 5, 2018
Answer to Question 1

b

Answer to Question 2

True


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