On January 1, Year 1, George Corp. entered into a 7-year lease agreement with Jordan, Inc. for equipment. Annual lease payments of $30,000 are payable at the end of each year. George knows that the lessor expects an 8% return on the lease. George has a 9% incremental borrowing rate. The equipment is expected to have an estimated useful life of 9 years. In addition, a third party has guaranteed to pay Jordan a residual value of $8,000 at the end of the lease.

7 years	8%	9%
Present value of $1	0.583	0.547
Present value of an annuity due	5.623	5.486
Present value of an ordinary annuity	5.206	5.033

In Georges September 30, Year 1 balance sheet, the principal amount of the lease obligation was:

• A.

  $151,516

• B.

  $146,614

• C.

  $150,990

• D.

  $156,180