On January 1 of the current year, Stephens Corporation leased machinery from Montgomery Company. The machine originally cost Montgomery $ 263, 000. The lease agreement is an operating lease, the terms of which call for five annual payments of $ 35, 000. The first payment is due at the inception of the lease; the other four payments are due on January 1 of subsequent years.

What journal entry should Stephens make on January 1 of the current year?