Chapter 10, Problem 18QS

To determine

Lease:

Lease is generally a contractual agreement between the lessee and lessor where the owner gives right to the other person to use his assets for a specific period of time in return of payments at regular interval of time.

Capital lease:

In capital lease, lessor funds the leased assets but operating control and economic risk remains with the lessee. At the end of the capital lease, leased asset becomes the property of the lessee.

To prepare: Journal entry to record capital lease of office equipment.