Answer:
1. Dr Equipment $ 905,861
Cr Lease Payable $ 905,861
2). Dr Lease Payable $ 125,000
Cr Cash $ 125,000
3) Dr Lease payable $ 115,000
Dr Interest Expense $ 10,000
Cr Cash $ 125,000
Explanation:
1. Preparation of the journal entry for the long-term lease in the General Fund..
Dr Equipment $ 905,861
Cr Lease Payable $ 905,861
2) Preparation of the first lease payment Journal entry on January 10,
Dr Lease Payable $ 125,000
Cr Cash $ 125,000
3) Preparation of the journal entry to second lease payment on January 10, 2018
Dr Lease payable $ 115,000
Dr Interest Expense (125000 x 8%) $ 10,000.00
Cr Cash $ 125,000
