A City Acquires Equipment on January 1,2013 by Means of a Capital

A city acquires equipment on January 1,2013 by means of a capital lease agreement.The agreement calls for paying the leasing company $300,000 in three $100,000 annual payments,starting December 31,2013.The present value of the three lease payments,using a 6% interest rate,is $267,300.The city will make the lease payments from the General Fund.What journal entry should the city make on January 1,2013 in the Fund?

A) debit expenditures - capital outlay;credit other financing sources,for $300,000
B) debit expenditures - capital outlay;credit other financing sources,for $267,300
C) debit capital assets;credit capital leases payable,for $300,000
D) debit expenditures - capital outlay;credit capital leases payable,for $267,300