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On 1/1/21, VWX Inc entered into a 6 year equipment lease requiring 1 payment of...

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Accounting

On 1/1/21, VWX Inc entered into a 6 year equipment lease requiring 1 payment of $25,000 per year, in advance. At the end of the lease term VWX will receive title to the equipment. The interest rate on the lease is 10%.

A finance lease requiring annual payments of $20,000, in advance, was capitalized for $120,000 on 1/1/21. The interest rate on the lease is 7%. The 12/31/21 Lease Liability balance (after the 2nd lease payment of $20,000) will be,

a) $87,000 b) $80,000 c) $100,000 d) $95,988

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