1.Which of the following parts of journal entries would be most likely to occur at the initial recording of a sale-leaseback transaction on the books of either the seller-lessee or the purchaser-lessor?

Select one:

a. Debit to Depreciation Expense

b. Credit to Unearned Revenue

c. Credit to Interest Revenue

d. Debit to Cost of Goods Sold

e. Credit to Lease Receivable

2.Long Beach, Inc., a lessor, charges Applewood Corp., a lessee, a $10,000 nonrefundable fee to enter into a four-year operating lease. The lease is effective on July 1, 2015. It provides for monthly rental of $2,500. In Applewood's income statement for the year ended June 30, 2016, rent expense should be

Select one:

a. $32,500

b. $30,000

c. $27,500

d. $40,000

e. $26,400