On July 1, 2018, a city entered into a capital lease for general capital assets. The capitalized cost was $800,000 based upon an implicit rate of interest of 4 percent. A payment of $40,000 was made at the inception of the lease and the first annual lease payment of $70,000 is due on July 1, 2019. Prepare the appropriate journal entries in the general fund:

1. The inception of the lease
2. The first annual lease payment