please explain

Garvoy Company (the lessee) entered into an equipment lease with Richse 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. The equipment is not specialized for Garvey. 2. The lease term is 5 years and requires Garvey to make annual payments of $65,949.37 at the end of each year. 3. The discount rate is 10%, which is implicit in the lease. Garvey knows this rate. 4. The fair value of the equipment at the lease inception is $250,000. The present value of an ordinary annuity of five payments of $65,949.37 each at 10% is $250,000 5. The equlpment 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 fease is classifed as a finance lease. Assume that Garvey is required to make payments on December 31 each yoar. Prepare the joumal entries that Garvey Company would make in the frrst year of the lease assuming the lease is classified as a finance lease Assume that Garvey is make payments on December-31 each year