United Cellular Systems leased a satellite transmission device from Pinnacle Leasing Services on January l, 2021. Pinnacle paid

$625,483 for the transmission device. Its fair value is $625,483. Terms of the Lease Agreement and Related Information are as below.

Lease term: 3 years (6 semiannual periods)

Semiannual lease payments: $ 120,000 at beginning of each period

Economic life of asset: 3 years

Interest rate: 12%

Required:

1. Prepare an amortization schedule that shows the pattern of interest expense for United Cellular Systems over the lease term.

2. Prepare the appropriate entries for 2021 for both the lessee and the lessor.