Question: On December 30, 2011, Rafferty Corp. leased equipment under a capital lease. Annual lease payments of $20,000 are due December 31 for ten years. The

On December 30, 2011, Rafferty Corp. leased equipment under a capital lease. Annual lease payments of

$20,000 are due December 31 for ten years. The equipment’s useful life is ten years, and the interest rate implicit in the lease is 10%. The capital lease obligation was recorded on December 30, 2011, at $135,000, and the first lease payment was made on that date. What amount should Rafferty include in current liabilities for this capital lease in its December 31, 2011 balance sheet?

a. $ 6,500

b. $ 8,500

c. $11,500

d. $20,000

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