Hall, Inc. agrees to lease equipment from White Inc. for 10 years for $50,000 at the end of each year. The equipment has a fair value of $350,000 and an estimated useful life of 10 years. The lease includes a guaranteed residual value of $20,000. In addition to the lease payments, Hall will pay $10,000 per year for a maintenance agreement. Hall can finance this lease with its bank at a 12% rate. The lessor's implicit interest rate is 10%. At the end of Year 1, Hall will make a payment of $60000. Which one of the following entries will properly record this payment?
a. DR obligation under capital lease $60000
CR Cash $60000
b. DR obligation under capital lease $28506
DR Interest expense $31494
CR Cash $60000
c. DR DR obligation under capital lease $18506
DR maintenance expense $10000
DR interest expense $31494
CR Cash $60000
d. DR DR obligation under capital lease $50000
DR maintenance expense $10000
CR cash $60000