On January 1, the Forman Group Leased Some Equipment on a 5-Year

Multiple Choice

On January 1, the Forman Group leased some equipment on a 5-year lease, paying $15,000 per year each December 31. The lease is considered to be an operating lease. The general journal entry to record the first lease payment on December 31 should be:

A) Debit Rent Expense $15,000; credit Cash $15,000.
B) Debit Rent Expense $75,000; credit Rent Payable $75,000.
C) Debit Rent Expense $15,000; credit Prepaid Rent $15,000.
D) Debit Cash $15,000; credit Prepaid Rent $15,000.
E) Debit Lease Liability $15,000; credit Cash $15,000.