On January 1, 2017, Cullumber Corporation signed a 5-year noncancelable lease for a machine. The terms of the lease called for Cullumber to make annual payments of $8,200 at the beginning of each year, starting January 1, 2017. The machine has an estimated useful life of 6 years and a $5,500 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Cullumber uses the straight-line method of depreciation for all of its plant assets. Cullumbers incremental borrowing rate is 11%, and the lessors implicit rate is unknown.

The present value of the minimum lease payments is:? Prepare all necessary journal entries for Cullumber for this lease through January 1, 2018.