The Following Information Relates to the Central School District

Essay

The following information relates to the Central School District.
In January 2018, the district acquires $500,000 of equipment by way of a capital lease. The lease, which incorporates an annual interest rate of 6 percent, requires the district to make four annual payments of $144,295 each. The equipment has a useful life of four years with no expected salvage value. In 2018, the district makes the first of the required payments.
1. Prepare all journal entries that the district should make in an appropriate governmental fund to record the acquisition of the equipment and the first lease payment.
2. How much expense relating to the equipment should the district recognize in its 2018 government-wide financial statements? Specify the account or accounts to be charged and the amount to be charged to each account.