The Red Cedar Eatery (RCE) has signed a 5-year contract with Mall, Inc. for 2,000 square feet of space in the Green Lake Mall. The contract requires payments of $2,000 per month payable on the first of each month. The contract also requires a $5,000 security deposit, which is to be refunded at the end of the lease. The RCE spent $80,000 on leasehold improvements that should have a useful life of 8 years.

Required:

1. Prepare the journal entry to record the rental payment for the first month.

2. Prepare the journal entry to record the payment of the security deposit.

3. Prepare the journal entry to recognize one month’s amortization of the leasehold improvement.