Garvey Company (the lessee) entered into an equipment lease with Richie Company (the lessor) on January 1 of Year 1. 1. The equipment reverts back to the lessor at the end of the lease, and there is no bargain purchase option. 2. The lease term is 5 years and requires Garvey to make annual payments of $65,949.37 at the beginning of each year. 3. The discount rate is 10%, which is implicit in the lease. Garvey knows this, and this rate is lower than its incremental borrowing rate. 4. The equipments fair value at the lease inception is $275,000. The present value of an ordinary annuity of five payments of $65,949.37 each at 10% is $275,000. 5. The equipment has an estimated economic life of 7 years and has zero residual value at the end of this time. Straight-line depreciation is used for similar assets. Required: Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a capital lease. MUST HAVE 8 ACCOUNTS TOTAL!