Mitchum Ltd Entered into a Lease Agreement on 1 July

Mitchum Ltd entered into a lease agreement on 1 July 2013 to lease equipment on the following terms: $$\begin{array} { | l | r | l | } \hline \text { Duration of lease } & 4 \text { years } & \\\hline \text { Useful life of leased asset } & 8 \text { years } & \\\hline \text { Guaranteed residual } & \$ 1,500 & \\\hline \text { Lease payments (in arrears) } & \$ 3,500 & \begin{array} { l } \text { per year (4 payments) } \\\text { due } 30 \text { June }\end{array} \\\hline\end{array}$$ The interest rate implicit in the lease is 6% and the fair value of the leased asset is $13 316.The lease is cancellable at the option of the lessee.The economic benefits provided by the leased asset are expected to be consumed evenly over its life.What are the appropriate entries in the books of the lessee at the end of the reporting period 30 June 2014?

A)
$$\begin{array} { | r | l | r | r | } \hline \mathrm { Dr } & \text { Interest expense } & 799 & \\\hline \mathrm { Dr } & \text { Lease liability } & 2701 & \\\hline \mathrm { Cr } & \text { Cash } & & 3500 \\\hline & & & \\\hline \mathrm { Dr } & \text { Lease amortisation expense } & 1332 & \\\hline \mathrm { Cr } & \text { Accumulated amortisation } & & 1332 \\\hline\end{array}$$
B)
$$\begin{array} { | c | l | r | r | } \hline \mathrm { Dr } & \text { Interest expense } & 728 & \\\hline \mathrm { Dr } & \text { Lease liability } & 2772 & \\\hline \mathrm { Cr } & \text { Cash } & & 3500 \\\hline & & & \\\hline \mathrm { Dr } & \text { Lease amortisation expense } & 1213 & \\\hline \mathrm { Cr } & \text { Accumulated amortisation } & & 1213 \\\hline\end{array}$$
C)
$$\begin{array} { | l | l | r | r | } \hline \mathrm { Dr } & \text { Rental expense-equipment } & 3500 & \\\hline \mathrm { Cr } & \text { Cash } & & 3500 \\\hline\end{array}$$
D)
$$\begin{array} { | l | l | r | r | } \hline \mathrm { Dr } & \text { Rental expense-equipment } & 3500 & \\\hline \mathrm { Cr } & \text { Cash } & & 3500 \\\hline & & & \\\hline \mathrm { Dr } & \text { Lease amortisation expense } & 3329 & \\\hline \mathrm { Cr } & \text { Accumulated amortisation } & & 3329 \\\hline\end{array}$$