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On January 1, 2021, Ran Fitness Inc. leased exercise equipment to Crunch Inc. The lease term...

On January 1, 2021, Ran Fitness Inc. leased exercise equipment to Crunch Inc. The lease term is 2 years. Payments of $16,500 are made at the beginning of every quarter for 2 years. The economic life of the equipment is also 2 years. The fair value of the equipment is $125,370. The implicit annual interest rate in the lease is 6%.

What is the outstanding lease liability balance after the second payment

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Answer #1
Initial lease liability 125370
Less: First payment 16500
Lease liability balance after first payment 108870
Interest expense recorded on April 1, 2021 1633 =108870*6%*3/12
Reduction in lease liability balance 14867 =16500-1633
Lease liability balance after first payment 108870
Less: Reduction in lease liability balance 14867
Outstanding lease liability balance after the second payment 94003 or 94003.05
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