Lem Company leased the first three floors in a building under an operating lease contract for a 10 -year period beginning January 1,1998 . The company paid \(\$ 240,000\) in cash (not representing a specific period's rent) and agreed to make annual payments equal to \(1 \%\) of the first \(\$ 1,500,000\) of sales and \(0.5 \%\) of all sales over \(\$ 1,500,000\). Sales for 1998 amounted to \(\$ 4,500,000\). Payment of the annual amount will be made in January 1999.

Prepare journal entries to record the cash payment of January 1, 1998, and the proper expense to be recognized for the use of the space in the leased building for 1998 .