A Government Entered into a Capital Lease Agreement to Acquire

A government entered into a capital lease agreement to acquire equipment for the general government on January 1, 2014. Five payments of $8,000 each are to be made, beginning on December 31, 2014. Discounting is at 6%, computed annually. The present value of the five payments is $33,699.
-Which of the following would be true as of January 1,2014?

A) An entry would be made debiting Expenditures and crediting Other Financing Sources-Capital Leases in a governmental fund, both in the amount of $40,000.
B) An entry would be made debiting Equipment and crediting Capital Leases Payable in a governmental fund, both in the amount of $33,699.
C) An entry would be made debiting Capital Expenditure and crediting Capital Leases Payable in a governmental fund, both in the amount of $33,699.
D) An entry would be made debiting Expenditures and crediting Other Financing Sources-Capital Leases in a governmental fund, both in the amount of $33,699.