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 (10-year life)	$ 4,200	$ 42,000	$ 25,400
Enterprise (4-year life)	11,400	45,600	41,000

a.

Prepare journal entries for the year 2015 for both of these leases for government-wide financial statements. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Record the entry for capital lease at the beginning of the year.

2. Record payment on capital lease at end of first year.

3. Record depreciation expense-Governmental.

4. Record depreciation expense-Business Type.

b.

Prepare journal entries for the year 2015 for both of these leases for fund financial statements. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 1. Record the entry for capital lease at the beginning of the year. 2. Record payment on capital lease at end of first year. 3. Record depreciation expense-Governmental. 4. Record depreciation expense-Business Type.