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 8 percent is viewed as appropriate. No bargain purchase options exist.

Fund Annual Payments Total Payments Present Value of Total Payments

General (10-year life) $ 4,500 $ 45,000 $ 31,500

Enterprise (4-year life) 11,600 46,40038,700

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.)

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

Date	General Journal	Debit	Credit
January 01, 2015

Record payment on capital lease at end of first year.

Date	General Journal	Debit	Credit
December 31, 2015

Record depreciation expense-Governmental.

Date	General Journal	Debit	Credit
December 31, 2015

Record depreciation expense-Business Type.

Date	General Journal	Debit	Credit
December 31, 2015

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.)

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

Date	General Journal	Debit	Credit
January 01, 2015

Record payment on capital lease at end of first year.

Date	General Journal	Debit	Credit
December 31, 2015

Record depreciation expense.

Date	General Journal	Debit	Credit
December 31,2015

Record present value of payments.

Date	General Journal	Debit	Credit
December 31, 2015

Record payment at the end of first year on leased truck recorded as capital lease.

Date	General Journal	Debit	Credit
December 31, 2015