Welby County Hospital Entered into a Capital Lease to Purchase $\quad$

Welby County Hospital entered into a capital lease to purchase a new MRI machine. The capitalizable cost of the equipment was $400,000 and the hospital made a $40,000 down payment. The entry required when the asset was acquired was $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\begin{array}{cr}&\quad\text { Debit } &\quad \text { Credit } \\\end{array}$
A)
$\begin{array}{lcr} \text { Equipment } & \$ 400,000 & \\\quad \text { Other Financing Sources - Capital Lease } & & \$ 360,000 \\\text { Cash } & & 40,000 \\\end{array}$

B)
$\begin{array}{lcr} \text { Expenditures } & \$ 400,000 & \\\quad \text { Other Financing Sources - Capital Lease } & & \$ 360,000 \\\text { Cash } && 40,000 \\\end{array}$

C)
$\begin{array}{lcr} \text { Equipment } \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad&\$360,000 & \\\text { Expenditures } &\quad 40,000 \\\quad \text { Lease Payable } & & \$360,000 \\\quad \text { Cash } && 40,000 \\\end{array}$

D)
$\begin{array}{lcr} \text { Equipment } &\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \$ 400,000 \\\quad \text { Lease Payable } & &\$360,000\\\text { Cash }&& 40,000\end{array}$