Problem
On January 1, 2016, Sheldon Corporation leased equipment to Munson Company. The lease term is 10 years. The first payment of $458,000 was made on January 1, 2016. Remaining payments are made on December 31 each year, beginning with December 31, 2016. The equipment cost Sheldon Corporation $2,568,300. The present value of the minimum lease payments is $2,808,300. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 13%, what will be the balance reported as a liability by Munson in the December 31, 2017, balance sheet?