Conroy Company leased equipment on January 1,2015.Information pertinent 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;the first payment was made at the inception of the lease.
• Conroy's incremental borrowing rate is 12%.
• The implicit interest rate is 10%;Conroy knew the implicit interest rate.
• The unguaranteed residual value is $50,000.
• The useful life of the equipment is 10 years.
• Conroy uses the straight-line depreciation method.
• The fair value of the equipment is $325,000.
• The lease agreement did not contain either a bargain purchase option or a transfer of title.
Required:
Prepare all the necessary journal entries for the year ended December 31,2015 with respect to Conroy Company's lease.

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The Answer of Conroy Company leased equipment on January 1,2015.Information pertinent 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;the first payment was made at the inception of the lease.
• Conroy's incremental borrowing rate is 12%.
• The implicit interest rate is 10%;Conroy knew the implicit interest rate.
• The unguaranteed residual value is $50,000.
• The useful life of the equipment is 10 years.
• Conroy uses the straight-line depreciation method.
• The fair value of the equipment is $325,000.
• The lease agreement did not contain either a bargain purchase option or a transfer of title.
Required:
Prepare all the necessary journal entries for the year ended December 31,2015 with respect to Conroy Company's lease.

Conroy Company Leased Equipment on January 1,2015