Montclair Equipment leases mechanical equipment to Essex Inc. The equipment is not specialized and is delivered on January 1, 2019. The fair value of the equipment is $118,000. The cost of the equipment to Montclair is $113,000 and the expected life of the mechanical equipment is 8 years. Montclair incurs initial direct costs of $10,000, which they elect to expense. The lease term for the equipment is 8 years, with the first payment due upon delivery, and seven subsequent annual payments beginning on December 31, 2019, and ending on December 31, 2025. Montclairs implicit rate is 5% and they expect that collection of the $14,500 lease payments is probable.

What is the principal balance in the Net Investment in Lease Sale Type account after the second payment on December 31, 2019? Round to nearest dollar.

PV Annuity Due PV Ordinary Annuity PV Single Sum

5%, 8 periods 6.78637 6.46321 0.67684

	a.	$98,402
	b.	$73,597
	c.	$83,902
	d.	$113,000