On January 1,2013,Daisy Corporation leased equipment,agreeing to pay $5,000 every December 31 for the entire four years of the lease.The present value of the lease payments,at 6% interest is $17,326.The lease is considered a capital lease.How would the company record this transaction?
A) Debit Rental Expense for $17,326 and credit Cash for $17,326.
B) Debit Rental Expense for $5,000 and credit Cash for $5,000.
C) Debit Leased Assets for $17,326 and credit Lease Liability for $17,326.
D) Debit Leased Assets for $20,000 and credit Lease Liability for $20,000.
E) Debit Interest Expense $4,717,debit Lease Liability for $283,and credit Cash for $5,000.
Correct Answer:
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