A County Enters into a Lease for Maintenance Equipment B $\begin{array}{lr}\text { Leases payable } &1,000 \\\quad \text { Cash } && 1,000 \\\end{array}$

A county enters into a lease for maintenance equipment. The lease is for $1,000 a month for eight months, and the lease cannot be extended. The present value of the lease payments is $7,860. What journal entry should the county make in its General Fund when it makes its first payment on the lease?
a.
$\begin{array}{lr}\text { Expenditures-capital outlay } & 8,000 \\\quad \text { Cash } &&1,000 \\\quad \text { Leases payable } && 7,000 \\\end{array}$

b.
$\begin{array}{lr}\text { Leases payable } &1,000 \\\quad \text { Cash } && 1,000 \\\end{array}$

c.
$\begin{array}{lr}\text { Expenditures-lease } &1,000 \\\quad \text { Cash } & &1,000 \\\end{array}$

d.
$\begin{array}{lr}\text { Expenditures-lease principal } &983 \\\text { Expenditures-interest } &17\\\text { Cash }&&1,000\end{array}$