On January 1, 20X1, Babson, Inc., leased two automobiles for executive use. The lease requires Babson to make five annual payments of $13,000, beginning January 1, 20X1. At the end of the lease term on December 31, 20X5, Babson guarantees that the residual value of the automobiles will total $10,000. The lease qualifies as a finance lease. The interest rate implicit in the lease is 9%.

Required:

Compute Babson’s recorded finance lease liability immediately after the first required payment.