On December 31, 2016, Kingbird Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Kingbird to make annual payments of $8,317 at the beginning of each year, starting December 31, 2016. The machine has an estimated useful life of 6 years and a $5,300 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Kingbird uses the straight-line method of depreciation for all of its plant assets. Kingbirds incremental borrowing rate is 10%, and the lessors implicit rate is unknown

Compute the present value of the lease payments and prepare all necessary journal entries for Kingbird for this lease through December 31, 2017