On July 1, 2019, suppose the City of Olympia, Washington leased a parking lot, agreeing to pay $500,000 at the start of the lease, and make five annual payments of $500,000 per year on June 30 of each subsequent year. The lease carries an interest rate of 4%. The countys 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.

General Fund
Date	Description	Debit	Credit
7/1/19	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	To record initial signing of lease.
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	To record first payment on lease.
6/30/20	Expendituresinterest	Answer	Answer
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	To record 2020 payment on lease.
6/30/21	Expendituresinterest	Answer	Answer
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	To record 2021 payment on lease.

b.

Enterprise Fund
Date	Description	Debit	Credit
7/1/19	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	To record initial signing of lease.
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	To record first payment on lease.
6/30/20	Expendituresinterest	Answer	Answer
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	To record 2020 payment on lease.
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	To record 2020 depreciation expense.
6/30/21	Expendituresinterest	Answer	Answer
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	To record 2021 payment on lease.
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	AnswerCashDepreciationExpendituresleasesExpendituresprincipalLease liabilityLeased capital assets, netOther financing sourcesleases	Answer	Answer
	To record 2021 depreciation expense.