On January 4 of this year, Freckles Boutique incurs a $105,000 cost to modernize its store. Improvements include new floors, ceilings, wiring, and wall coverings. These improvements are estimated to yield benefits for 10 years. Freckles leases its store and has eight years remaining on the lease.

1.Prepare the journal entry to record the cost of modernization.

Record the cost of modernization of the store for $105,000 cash.

2. Prepare the journal entry to record amortization at the end of this current year.

Record the year-end adjusting entry for the amortization expense of the leasehold improvements.