United Cellular Systems leased a satellite transmission device from Pinnacle Leasing Services on Jan Pinnacle paid $625,483 for the transmission device. Its fair value is $625,483. Terms of the Lease Agreement and Related Information: Lease term 3 years (6 semiannual periods) Semiannual rental payments $120,000 at beginning of each period Economic life of asset 3 years Interest rate 12% Prepare the appropriate entries for both United Cellular Systems and Pinnacle Leasing Services on Ja inception of the lease. Calculation of the present value of minimum lease payments. Present value of periodic rental payments: ($120,000 x 5.21236*) = $625,483 January 1, 2017 United Cellular Systems (Lessee) Leased equipment (calculated above). 625,483 Lease payable (calculated above) ...... 625,483 Lease payable... 120,000 Cash (lease payment) .... 120,000 Pinnacle Leasing Services (Lessor) Lease receivable (calculated above) 625,483 Inventory of equipment (lessor's cost). 625,483 Cash (lease payment)... 120,000 Lease receivable .... 120,000 2.Prepare an amortization schedule that shows the pattern of interest expense for United Cellular Sys revenue for Pinnacle Leasing Services over the lease term. Decrease In Outstanding Date Payments Effective Interest Balance Balance (6% X Outstanding balance) 1/1/17 625,483 1/1/17 120,000 120,000 505,483 7/1/17 120,000 .06 (505,483) = 30,329 89,671 415,812 1/1/18 120,000 .06 (415,812) = 24,949 95,051 320,761 7/1/18 120,000 .06 (320,761) = 19,246 100,754 220,007 1/1/19 120,000 .06 (220,007) = 13,200 106,800 113,207 7/1/19 120,000 .06 (113,207) = 6,793* 113,207 0 720,000 94,517 625,483