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Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $2,000 purchase option is
Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $2,000 purchase option is reasonably certain to be exercised at the end of the five-year lease. The asset has an expected economic life of eight years. Lease Cash Payment Payment Effective Interest 1 2 8,000 8,000 8,000 8,000 8,000 2,000 3 4 5 6 Decrease in Outstanding Balance Balance 34,600 ?? 26,600 5,340 21,260 5,874 15,386 6,461 8,925 ?? ?? 1,818 0 ?? 2,660 2, 126 1,539 ?? 182 What would be the amount of interest expense recorded with payment 5? Multiple Choice $2,000. O O $893. O $7,107. O $1,107
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