Conroy Company leased equipment on January 1. Informationpertinent to the lease is as follows:...

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Accounting

Conroy Company leased equipment on January 1. Informationpertinent to the lease is as follows: The lease term is 6 years.Annual payments of $60,000 are due on January 1 of each year; thefirst payment was made at the inception of the lease. Conroy’sincremental borrowing rate is 12%. The implicit interest rate is10%; Conroy knew the implicit interest rate. The unguaranteedresidual value is $50,000. The useful life of the equipment is 10years. Conroy uses the straight-line depreciation method. The fairvalue of the equipment is $325,000.The lease agreement did notcontain either a bargain purchase option or a transfer oftitle.
Required: Prepare all the necessary journal entries for the yearended December 31, 20X1 with respect to Conroy Company’s lease.

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In: AccountingConroy Company leased equipment on January 1. Informationpertinent to the lease is as follows: The...Conroy Company leased equipment on January 1. Informationpertinent to the lease is as follows: The lease term is 6 years.Annual payments of $60,000 are due on January 1 of each year; thefirst payment was made at the inception of the lease. Conroy’sincremental borrowing rate is 12%. The implicit interest rate is10%; Conroy knew the implicit interest rate. The unguaranteedresidual value is $50,000. The useful life of the equipment is 10years. Conroy uses the straight-line depreciation method. The fairvalue of the equipment is $325,000.The lease agreement did notcontain either a bargain purchase option or a transfer oftitle.Required: Prepare all the necessary journal entries for the yearended December 31, 20X1 with respect to Conroy Company’s lease.