Sunland Corporation manufactures replicators. On January 1, 2017, it leased to Althaus Company a replicator that had cost $119,700 to manufacture. The lease agreement covers the 5-year useful life of the replicator and requires 5 equal annual rentals of $42,300 payable each January 1, beginning January 1, 2017. An interest rate of 12% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs. Prepare Sunlands January 1, 2017, journal entries.