The city of Morehead leased equipment. The life of the noncancellable lease is 10 years. Using an 8 percent interest rate, the present value of the lease payments is $905,861. The first payment of $125,000 is due when the lease begins, January 10, 2020. An additional payment of $125,000 is due on January 10th for each of the next 9 years. Prepare journal entries to record: 1. The long-term lease in the General Fund. 2. The first lease payment on January 10, 2020. 3. The second lease payment on January 10, 2021.

*Figured it out - #3 is debit 62,531 for principal and 62,469 for interest

Credit Debit 905,861 0 0 905.861 Note: Round your answers to the nearest dollar. Account 1. Expenditures-capital outlay Other financing sources-long-term leases V To record a long-term lease. 2. Expenditures-lease principal Cash To record initial lease payment. 3. Expenditures-lease principal Expenditures-lease interest Cash 125.000