Exhibit 20-1 on January 1, 2014, Pearson Company Signed a Lease

Exhibit 20-1 On January 1, 2014, Pearson Company signed a lease agreement requiring six annual payments of $60,000, beginning December 31, 2014. The lease qualifies as a capital lease. Pearson's incremental borrowing rate was 9% and the lessor's implicit rate, known by Pearson, was 10%. The present value factors of an ordinary annuity of $1 for six periods for interest rates of 9% and 10% are 4.48592 and 4.35526, respectively.

-Refer to Exhibit 20-1. The interest expense for 2014 would be (round answers to the nearest dollar)

A) $21,003
B) $22,746
C) $24,224
D) $26,133

Correct Answer:

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