On January 1, Cheryl, Inc., entered into a lease contract. The lease contract was an eightyear lease for a sound system with \(\$ 28,000\) annual lease payments due at the end of each year. Cheryl took possession of the sound system on January 1. The present value of the lease payments under the lease contract is \(\$ 173,778\).

The lease contract is a finance lease. Prepare the journal entry for this lease on January 1.