Stellar Corporation enters into a 5-year lease of equipment on December 31, 2016, which requires 5 annual payments of $36,900 each, beginning December 31, 2016. In addition, Stellar guarantees the lessor a residual value of $21,400 at the end of the lease. However, Stellar believes it is probable that the expected residual value at the end of the lease term will be $11,400. The equipment has a useful life of 5 years. Prepare Stellars' December 31, 2016, journal entries assuming the implicit rate of the lease is 10% and this is known to Stellar.