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
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