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On December 31, 2020, Reagan Inc. signed a lease with Silver Leasing Co. for some equipment having a seven-year useful life. The lease payments are made by Reagan annually, beginning at signing date. Title does not transfer to the lessee, so the equipment will be returned to the lessor on December 31, 2026. There is no purchase option, and Reagan guarantees a residual value to the lessor on termination of the lease. Reagan's lease amortization schedule appears below:

Dec. 31	Payments			Interest			Decrease in Balance			Outstanding Balance
2020										$	540,080
2020	$	98,300					$	98,300			441,780
2021	$	98,300		$	26,507			71,793			369,987
2022	$	98,300			22,199			76,101			293,886
2023	$	98,300			17,633			80,667			213,219
2024	$	98,300			12,793			85,507			127,712
2025	$	98,300			7,663			90,637			37,075
2026	$	39,300			2,225			37,075			0

What is the balance of the lease liability on Reagan's December 31, 2022, balance sheet (after the third lease payment is made)?

• $293,886.

• $195,586.

• $271,687.

• $369,987.