(Journal entries to record a capital lease transaction)
A town enters into a lease-purchase agreement with Trucks,Inc.to acquire four garbage trucks.The agreement provides that the town pay $100,000 at the end of each year for four years.Upon full payment,the trucks become town property.The agreement is based on an interest rate of 7%.(The present value of an annuity of $1 for 4 periods at 7% is 3.3872. )The lease agreement is accounted for in the General Fund.
Required:
Prepare journal entries for the General Fund to record (a)the lease agreement and the lease payment (b)at the end of the first year and (c)at the end of the second year.

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The Answer of (Journal entries to record a capital lease transaction)
A town enters into a lease-purchase agreement with Trucks,Inc.to acquire four garbage trucks.The agreement provides that the town pay $100,000 at the end of each year for four years.Upon full payment,the trucks become town property.The agreement is based on an interest rate of 7%.(The present value of an annuity of $1 for 4 periods at 7% is 3.3872. )The lease agreement is accounted for in the General Fund.
Required:
Prepare journal entries for the General Fund to record (a)the lease agreement and the lease payment (b)at the end of the first year and (c)at the end of the second year.

(Journal Entries to Record a Capital Lease Transaction)