Recording Entries for Finance Lease-No Residual, Payments Increase at a Defined Rate On December 31 of Year 1, Drew Company leased equipment under a lease for a period of five years. Drew contracted to pay $18,000 on December 31 of Year 1, with an annual increase of 3% (calculated on the previous year's lease payment) for each of the next four years due on December 31. The leased equipment has a useful life of seven years and a fair value of $90,000, and the interest rate implicit in the lease is 8%, which is known to Drew Company. Required a. How would Drew Company classify the lease? b. Calculate the lease liability on December 31 of Year 1. Note: Round your answer to the nearest whole dollar. $ 0 Lease Liability Schedule Journal Entries c. Prepare a schedule of the lease liability for the first three years of the lease term. Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Date Dec. 31, Year 1 Lease Payment Interest on Liability Lease Liability Change Lease Liability $ 0 Dec. 31, Year 1 $ 0 $ 0 $ 0 $ 0 Dec. 31, Year 2 $ 0 $ 0 $ 0 $ Dec. 31, Year 3 $ 0 $ 0 $ 0 $ 00