Lease Transactions On July 1,2019, suppose the City of Olympia, Washington leased a parking lot, agreeing to pay $200,000 at the start of the lease, and make five annual payments of $200,000 per year on june 30 of each subsequent year. The lease carries an interest rate of 4%. The county's fiscal year ends June 30 , and straight-line depreciation is used, if appropriate. Required Prepare the entries to record the lease agreement and payments on July 1,2019, june 30,2020 , and june 30,2021, assuming a. the lease is recorded in the general fund. b. the lease is recorded in an enterprise fund Instructions: - Use a financial calculator or Excel to compute the value of the capital lease. - Round answers to the nearest whole number. - Use rounded answers for subsequent computations (and then round to the nearest whole number) a. \begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ General Fund } \\ \hline 7/1/19 & Expenditures-leases & & 200,000 & 0 \\ \hline \multirow{5}{*}{4} & Other financing sources-leases & ^ & 0 & 200,000 \\ \hline & To record initial signing of lease. & & & \\ \hline & Expenditures-principal & ^ & 200,000 & 0 \\ \hline & Cash & & 0 & 200,000 \\ \hline & To record first payment on lease. & & & \\ \hline \multirow[t]{4}{*}{6/30/20} & Expenditures-interest & & 200,000 & 0 \\ \hline & Expenditures-principal & & 35,615 & 0 \\ \hline & Cash & & 0 & 235,615 \\ \hline & To record 2020 payment on lease. & & & \\ \hline \multirow[t]{4}{*}{6/30/21} & 1 Expenditures-interest & & 200,000 & 0 \\ \hline & Expenditures-principal & & 6,575 & 0 \\ \hline & & & 0 & 206,575 \\ \hline & To record 2021 payment on lease. & & & \\ \hline \end{tabular} b. \begin{tabular}{|c|c|c|c|} \hline Date & \begin{tabular}{l} Enterprise Fund \\ Description \end{tabular} & Debit & Credit \\ \hline \multirow[t]{6}{*}{7/1/19} & Leased capital assets, net & 890,364 & 0 \\ \hline & Lease liability & 0 & 890,364 \\ \hline & To record initial signing of lease. & & \\ \hline & Lease liability & 35,615 & 0 \\ \hline & Cash & 0 & 35,615 \\ \hline & To record first payment on lease. & & \\ \hline \multirow[t]{7}{*}{6/30/20} & Expenditure-interest & 0 & 0 \\ \hline & Depreciation & 0 & 0 \\ \hline & Depreciation & 0 & 0 \\ \hline & To record 2020 payment on lease. & & \\ \hline & Depreciation & 0 & 0 \\ \hline & Expenditures-principal & 0 & -0 \\ \hline & To record 2020 depreciation expense. & & \\ \hline \multirow[t]{7}{*}{6/30/21} & 1 Expenditures-interest & 0 & 0 \\ \hline & Depreciation & 0 & 0 \\ \hline & Expenditures-principal & 0 & 0 \\ \hline & To record 2021 payment on lease, & & \\ \hline & Expenditures-leases & 0 & 0 \\ \hline & Lease liability & 0 & 0 \\ \hline & To record 2021 depreciation expense. & & \\ \hline \end{tabular} Check Lease Transactions On July 1,2019, suppose the City of Olympia, Washington leased a parking lot, agreeing to pay $200,000 at the start of the lease, and make five annual payments of $200,000 per year on june 30 of each subsequent year. The lease carries an interest rate of 4%. The county's fiscal year ends June 30 , and straight-line depreciation is used, if appropriate. Required Prepare the entries to record the lease agreement and payments on July 1,2019, june 30,2020 , and june 30,2021, assuming a. the lease is recorded in the general fund. b. the lease is recorded in an enterprise fund Instructions: - Use a financial calculator or Excel to compute the value of the capital lease. - Round answers to the nearest whole number. - Use rounded answers for subsequent computations (and then round to the nearest whole number) a. \begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ General Fund } \\ \hline 7/1/19 & Expenditures-leases & & 200,000 & 0 \\ \hline \multirow{5}{*}{4} & Other financing sources-leases & ^ & 0 & 200,000 \\ \hline & To record initial signing of lease. & & & \\ \hline & Expenditures-principal & ^ & 200,000 & 0 \\ \hline & Cash & & 0 & 200,000 \\ \hline & To record first payment on lease. & & & \\ \hline \multirow[t]{4}{*}{6/30/20} & Expenditures-interest & & 200,000 & 0 \\ \hline & Expenditures-principal & & 35,615 & 0 \\ \hline & Cash & & 0 & 235,615 \\ \hline & To record 2020 payment on lease. & & & \\ \hline \multirow[t]{4}{*}{6/30/21} & 1 Expenditures-interest & & 200,000 & 0 \\ \hline & Expenditures-principal & & 6,575 & 0 \\ \hline & & & 0 & 206,575 \\ \hline & To record 2021 payment on lease. & & & \\ \hline \end{tabular} b. \begin{tabular}{|c|c|c|c|} \hline Date & \begin{tabular}{l} Enterprise Fund \\ Description \end{tabular} & Debit & Credit \\ \hline \multirow[t]{6}{*}{7/1/19} & Leased capital assets, net & 890,364 & 0 \\ \hline & Lease liability & 0 & 890,364 \\ \hline & To record initial signing of lease. & & \\ \hline & Lease liability & 35,615 & 0 \\ \hline & Cash & 0 & 35,615 \\ \hline & To record first payment on lease. & & \\ \hline \multirow[t]{7}{*}{6/30/20} & Expenditure-interest & 0 & 0 \\ \hline & Depreciation & 0 & 0 \\ \hline & Depreciation & 0 & 0 \\ \hline & To record 2020 payment on lease. & & \\ \hline & Depreciation & 0 & 0 \\ \hline & Expenditures-principal & 0 & -0 \\ \hline & To record 2020 depreciation expense. & & \\ \hline \multirow[t]{7}{*}{6/30/21} & 1 Expenditures-interest & 0 & 0 \\ \hline & Depreciation & 0 & 0 \\ \hline & Expenditures-principal & 0 & 0 \\ \hline & To record 2021 payment on lease, & & \\ \hline & Expenditures-leases & 0 & 0 \\ \hline & Lease liability & 0 & 0 \\ \hline & To record 2021 depreciation expense. & & \\ \hline \end{tabular} Check
