Recording Entries for Operating Lease-Lessee On January 1 of Year 1, Wayne Inc. signed an eight-year lease for office space for $24,000 annually due each January 1, with the first payment due immediately. Wayne has the option to renew the lease for an additional four-year period on or before January 1 of Year 9, at market lease rates at the time of renewal. The remaining economic life of the office is 30 years. Wayne Inc. is not aware of the implicit rate of the lease but has an incremental borrowing rate of 7%. Wayne Inc. paid $1,000 on January 1 of Year 1 for initial direct costs. Required a. How would Wayne Inc. classify the lease? Operating Lease Lease Liability Schedule Right-of-Use Asset Schedule Journal Entries c. Prepare a schedule of the right-of-use asset for the first two 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 Jan. 1, Year 11 Lease Expense Interest on Liability Right-of-Use Asset Change Right-of-Use Asset $ 154,343 Year 1 $ Year 2 $ 25,000 x $ 25,000 * $ 9,054 8,008 $ $ 15,946 * $ 16,992 * $ 138,343 x 121351