On January 1, 2012, the chief operating officer of New Belgium, Jeff Stambaugh, signed a non-cancellable lease for street equipment. The lease was for 10 years, the economic life of the property. The fair market value of the equipment (and present value of the minimum rentals) is $ 75,152. The township, incremental borrowing rate is 7 percent. The $ 10,000 annual lease payment is due on the first day of each year beginning in 2012.
Prepare all journal entries necessary to record the lease transaction for 2012 and the payment made in 2013. (Assume the government uses a voucher system.)