On January 1, 2021, Sherby entered into a 4-year lease for a forklift. The forklift has an economic life of 6 years and a fair value of $70,000. The annual lease payment (first payment due 1/1/2021) is $17,000. Sherby can buy the forklift at the end of the 4 years for $9,000 even though the estimated residual value at that time is estimated to be $15,000. The implicit rate on the lease, which happened to be listed in the lease contract, is 8%.

Prepare any required journal entries, and show all supporting calculations.