On January 1, 2010, a city entered into the following leases for equipment items. Each of the leases qualifies as a capital lease. Initial payments are on December 31, 2010. An interest rate of 12 percent is viewed as appropriate. No bargain purchase options exist.

a. Prepare journal entries for the year 2010 for both of these leases for government-wide financial statements.
b. Prepare journal entries for the year 2010 for both of these leases for fund-based financialstatements.

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Fund General (10-year life) Enterprise (4-year life) Annual Payments $3,000 9,000 Total Payments $30,000 36,000 Present Value of Total Payments $19,000 30,600 all