On 1 January 2018 Ace Ltd entered into an arrangement to lease an item of equipment for four (4) years. The four (4) annual lease payments of $15,000 are due on 1 January of each year with the first lease payment required on 1 January 2019. Lease preparation and legal costs of $5,000 were paid on 1 January 2018. The arrangement also includes a residual amount of $10,000, due on 1 January 2022, that has been 100% guaranteed by Ace Ltd. The lease arrangements implicit rate of interest is 10%. Ace Ltd has classified the arrangement as a lease under AASB 16: Leases and has adopted a 31 December year-end balance date. Using the present value tables (see link below) and amounts rounded to the nearest whole dollar, choose the correct lease entry that will be recognised in Ace Ltds financial statements for the year ended 31 December 2018:

a) Debit to Right-of-use asset for $52,550

b) Credit to Lease liability for $59,380

c) Credit to Cash at bank for $20,000

d) Debit to Interest expense for $5,438