The City of Roswell Has a 6/30 Fiscal Year-End

Multiple Choice

The City of Roswell has a 6/30 fiscal year-end. The city uses the consumption method for recognizing inventories and prepayments. On July 1, 2017, the city leased computer equipment for use in the city's general activities. The lease is a three-year lease that qualifies as an operating lease. The city prepaid the entire three-year rental fee of $45,000. At June 30, 2018, the appropriate account balances in the general fund associated with this transaction would be

A) Prepaid lease $0; Expenditures $45,000; Fund balance-nonspendable $0.
B) Prepaid lease $45,000; Expenditures $0; Fund balance-nonspendable $45,000.
C) Prepaid lease $30,000; Expenditures $45,000; Fund balance-nonspendable $30,000.
D) Prepaid lease $30,000; Expenditures $15,000; Fund balance-nonspendable $0.