On December 30, 2019, Trace Company leased equipment under a finance lease for a period of 10 years. Trace contracted to pay $90,000 annual rent on December 31, 2019, and on December 31 of each of the next nine years. The finance lease liability was appropriately recorded at $608,312 on December 30, 2019, before the first payment. The leased equipment has a useful life of 12 years, and the interest rate implicit in the lease is 10%, known by Trace. Trace uses the straight-line method for depreciating all equipment.

In recording the December 31, 2021, payment, Trace should reduce its lease liability by:

A) $41,986

B) $32,086

C) $29,169

D) $38,169

Please show your work. Thank you