On January 1, 2020, Microband Industries issued $50 million of 8%, 25-year convertible bonds at 102. The bonds pay interest on June 30th and December 31st. Each $1,000 bond is convertible into 50 shares of Microband's no par common stock. Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 98. Upon issuance of the bonds, Microband should:

		Credit bonds payable $49,000,000.
		Credit premium on bonds payable $1,000,000.
		Credit bonds payable $51,000,000.
		Credit equity $1,000,000.

1. On December 30, 2019, Rafferty Corporation leased equipment under an operating lease. Annual lease payments of $20,000 are due December 31 for 10 years. The equipment's useful life is 10 years and the interest rate implicit in the lease is 10%. The operating lease obligation was recorded on December 30, 2019 at $135,000 and the first lease payment was made on that date.

   What amount should Rafferty record as a reduction of the lease liability for the payment made on December 30, 2020?

   		$8,500
   		$11,500
   		$20,000
   		$6,500