I am having a problem trying to figure out how to do a reduction in liability. This is the whole problem all answers are correct except the reduction in liability. Answers given in solutions are incorrect!!!!

Thank you,

Sharon Ray

ACCN 4443 Advanced Financial Accounting: ACCN 4443 07W1 17A

6th ed.

Chapter 12 Homework

On January 1, 2015, a city entered into the following leases for equipment items. Each of the leases qualifies as a capital lease. Initial payments are on December 31, 2015. An interest rate of 10 percent is viewed as appropriate. No bargain purchase options exist.

Fund	Annual Payments	Total Payments	Present Value of Total Payments
General (5-year life)	$ 8,000	$ 40,000	$ 33,350
Enterprise (6-year life)	6,000	36,000	28,750
There is no more information this is all the information there is!!

a.

What balances should be reported on government-wide financial statements for December 31, 2015, and the year then ended? (Round your answers to the nearest dollar amount.) Enterprise Fund Least asset $28750 Depreciation Expense $4,792 Acc. Depr. $4,792 Interest Expense $2,875 Reduction in liability ?? Liability ?? General Fund Leased asset $33,350 Depr Exp. $6,670 Acc Depr . $6,670 Interest Exp . $3,335 Reduction in Liability ?? Liability ???

b.	What balances should be reported on fund financial statements for December 31, 2015, and the year then ended? (Round your answers to the nearest dollar amount.)

Do not need help with this part b. it is correct!!!!