Sage Hill Company leased equipment from Costner Company, beginning on December 31, 2016. The lease term is 6 years and requires equal rental payments of $59,309 at the beginning of each year of the lease, starting on the commencement date (December 31, 2016). The equipment has a fair value at the commencement date of the lease of $290,000, an estimated useful life of 6 years, and no estimated residual value. The appropriate interest rate is 9%. Click here to view the factor table. Prepare Sage Hills 2016 and 2017 journal entries, assuming Sage Hill depreciates similar equipment it owns on a straight-line basis.