AGB Ltd Has Leased Some Equipment to Scram Ltd at an Annual

AGB Ltd has leased some equipment to Scram Ltd at an annual rental of $4000 payable at the end of the year.The equipment cost AGB $14 420 to purchase.Scram expects it will probably renew the lease each year but it does not have to do so.After five years the equipment will have no value.AGB has paid for a maintenance agreement with the makers of the equipment to cover the cost of any repairs or maintenance and has also insured it against the usual risks.AGB works on an interest rate of 12% in its calculation of lease charges and calculates any applicable depreciation on a straight-line basis.At the end of the first year,AGB should make the following entry(ies) :

A) $\begin{array} { l l l } \text { Dr Cash at Bank } & \$ 4000 & \\\text { Cr Lease Receivable } & & \$ 2884 \\\text { Cr Interest Revenue } & & \$ 1731\end{array}$
B) B) Dr Depreciation Expense $\quad \$ 2884$
Cr Accumulated Depreciation $\$ 2884$
Cr Cash at Bank $\quad \$ 4000$
C) $\begin{array} { c c r } \text { C) Dr Depreciation Expense } & \$ 2884 & \\{ \text { Cr Accumulated Depreciation } } & & \$ 2884 \\\text { Dr Cash at Bank } & \$ 4000 & \\\quad \text { Cr Lease Receivable } & & \$ 2269 \\\quad \text { Cr Lease Rental Revenue } & & \$ 1731\end{array}$
D) $\begin{array} { l l l } \text { Dr Cash at Bank } & \$ 4000 & \\\text { Cr Lease Receivable } & \$ 1731 \\\text { Cr Interest Revenue } & \$ 2269\end{array}$