Nace Manufacturing Company leased a piece of nonspecialized equipment for use in its operations from Righteous Leasing on January 1, 2019. The 10 year lease requires lease payments of $5,500, beginning on January 1, 2019, and at each December 31 thereafter through 2027. The equipment is estimated to have a 10 year life, is depreciated on the straight-line basis and will have no residual value at the end of the lease term Nace's incremental borrowing rate is 8%. Initial direct costs of $1,800 are incurred by the lessee on January 1, 2019. Righteous Leasing acquired the asset just prior to the lease term at a cost of $40,912. Collection of all lease payments is reasonably assured. What is the reduction in the lease liability recorded with the first and second lease payments, respectively? A. $5,500, $2,751 B. $36,669, $2,566 C. $4,166, $4,166 D. $3,189 $2,934