The City of Leonard decides to lease school desks for its school system rather than buy them because the lessor will do all scheduled maintenance. On January $1,2024,$ the school system leases $5,000$ school desks for four years. After that, they will be returned to the manufacturer. Payment will be $$20$ per desk per year with payments on January $1,$ beginning on January $1,2024.$ The city does not know how the lessor determined the annual charge. The city has an annual incremental borrowing rate of $8$ percent. The present value of an annuity due of $$1$ at an $8$ percent annual rate for four periods is $3\mathrm{.}5771.$

Required:

Make the journal entries for the City of Leonard for $2024$ and $2025$ in preparing government$-$wide financial statements. Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.

Make the journal entries for the City of Leonard for $2024$ and $2025$ in preparing fund financial statements for its governmental funds. Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.

 

 

Requirement A:

$1.$ Record schools four$-$year lease of school desks at the present value of the payments.

$2.$ Record the first payment for the leased asset @ $$20$ per desk.

$3.$ Record the amortization of cost of the leased asset over four years using straight$-$line method.

$4.$ Record interest for the year as $8$ percent of the liability.

$5.$ Record the second payment for the leased asset @ $$20$ per desk.

$6.$ Record the amortization of cost of the leased asset over four years using straight$-$line method.

$7.$ Record interest for the year as $8$ percent of the liability.

 

 

Requirement B

$1.$ Record the contract signed that will require four annual payments.

$2.$ Record the first lease payment.

$3.$ Record the second lease payment.