Items 1 through 3 are based on the following:
Rock County has acquired equipment through a noncancelable lease-purchase agreement dated December 31, 2005. This agreement requires no down payment and the following minimum lease payments:
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|
December 31 |
Principal |
Interest |
Total |
|
2006 |
$50,000 |
$15,000 |
$65,000 |
|
2005 |
50,000 |
10,000 |
60,000 |
|
2006 |
50,000 |
5,000 |
55,000 |
What account should be debited for $150,000 in the general fund at inception of the lease if the equipment is a general fixed asset and Rock does not use a capital projects fund?
- Other Financing Uses Control.
- Equipment.
- Expenditures Control.
- Memorandum entry only.
If the equipment is used in enterprise fund operations and the lease payments are to be financed with enterprise fund revenues, what account should be debited for $150,000 in the enterprise fund at the inception of the lease?
- Expenses Control.
- Expenditures Control.
- Other Financing Sources Control.
- Equipment.
If the equipment is used in internal service fund operations and the lease payments are financed with internal service fund revenues, what account or accounts should be debited in the internal service fund for the December 31, 2005 lease payment of $65,000?
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|
a. |
Expenditures Control |
$65,000 |
|
b. |
Expenses Control |
$65,000 |
|
c. |
Capital Lease Payable |
$50,000 |
|
Expenses Control |
15,000 |
|
|
d. |
Expenditures Control |
$50,000 |
|
Expenses Control |
15,000 |