Contour Manufacturing leased a major piece of manufacturing equipment from Rapps Capp. Leasing Company on January 1st. 2019.Rapps paid $625,483 for the equipment. Its fair value is $625,483. The lease term is 3 years 6 semiannual payments of $120,000 at the beginning of each period. The economic life of the asset is 3 years and the interest rate is 12%.

Requirements:

1. Prepare the entries to entries to record the lease for both Contour manufacturing and Rapps Capp. Leasing Company at the On January 1^st 2019.
2. Prepare the amortization schedule to show the interest expense for Contour manufacturing over the life of the lease.
3. Prepare the appropriate entries to record the second lease payment on July 1, 2019 and the adjusting entries entry at December 31,2019 for both companies.