On December 31, 2016, Larkspur Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Larkspur to make annual payments of $9,399 at the beginning of each year, starting December 31, 2016. The machine has an estimated useful life of 6 years and a $4,700 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Larkspur uses the straight-line method of depreciation for all of its plant assets. Larkspurs incremental borrowing rate is 6%, and the lessors implicit rate is unknown. Present Value of lease payments is 41968

Prepare all necessary journal entries for Larkspur for this lease through December 31, 2017. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 5,275.)