On January 2, 2025, Gold Star Leasing Company leases equipment to Brick Co. with 5 equal annual payments of $160,000 each, payable beginning January 2, 2025. Brick Co. agrees to guarantee the $150,000 residual value of the asset at the end of the lease term. The expected value of the residual value is $50,000. Brick's incremental borrowing rate is 10%, however, it knows that Gold Star's implicit interest rate is 8%. What journal entry would Brick Co. make at January 1, 2026, to record the second lease payment? PV Annuity Due PV Ordinary Annuity PV Single Sum 8%, 5 periods 4.31213 3.99271 .68508 10%, 5 periods

a) Lease Liability $160,000 Cash $160,000 b) Lease expense $160,000 Cash $160,000 c) Lease Liability $117,604 Interest expense $42,396 Cash $160,000 d) Lease Liability $116,212 Interest expense 43,788 cash 160,000