On Jan. 1, 2020, Firm A leased equipment with a list price of $180,000, a lease life of 4 years, an asset life of 4 years, a salvage value of $0, and a contract interest rate of 8%.

On Dec. 31, 2020, if the annual lease payment is $69,846, the interest expense is $14,400, and the reduction of lease liability is $55,446, what is the journal entry for this annual lease payment?

Select one:

a.

Interest Expense		55,446
Lease Liability		14,400
Cash			69,846

b.

Interest Expense		69,846
Lease Liability			55,446
Cash			14,440

c.

Interest Expense		14,440
Lease Liability		55,446
Cash			69,846

d.

Interest Expense		69,846
Cash			69,846