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The city of Morehead leased equipment. The life of the noncancellable lease is 10 years. Using...

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Accounting

The city of Morehead leased equipment. The life of thenoncancellable lease is 10 years. Using an 8 percent interest rate,the present value of the lease payments is $905,861. The firstpayment of $125,000 is due when the lease begins, January 10, 2017.An additional payment is due on January 10th for each of the next 9years. Prepare journal entries to record:

1. The long-term lease in the General Fund.

2. The first lease payment on January 10, 2017.

3. The second lease payment on January 10, 2018

Answer & Explanation Solved by verified expert
4.3 Ratings (683 Votes)
Journal Entries Date Account titles and Explanation Debit Credit January 10 2017 Equipment 90586100 Lease Payable 90586100 To record lease liability at the beginning of lease period January 10 2017 Lease Payable 12500000 Cash 12500000    See Answer
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