Carla Vista Leasing Company leases a new machine to Sandhill Corporation. The machine has a cost of $65,000 and fair value of $89,000. Under the 3-year, non-cancelable contract, Sandhill will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2025. Carla Vista expects to earn an 8% return on its investment, and this implicit rate is known by Sandhill. The annual rentals are payable on each December 31, beginning December 31, 2025. Prepare the journal entry at commencement of the lease for Sandhill, assuming (1) Sandhill does not know Carla Vista's implicit rate (Sandhill's incremental borrowing rate is 9% ), and (2) Sandhill incurs initial directs costs of $10,000. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round final answers to 0 decimal places e.g. 5,275.)