Problem 2. Hector is a graphic designer who had his own firm working out of his apartment for the past 18 months. He decided to obtain his own office space in a renovating area of Santa Monica, California, and signed a lease for 12 months. Monthly rental was $2,500 and he had to pay first and last months rent when he moved in to the rented space. Hector measures his income on a monthly basis.

1. Using the BSE format, record the payment at the beginning of the month for the first and last months rent amounts.
2. At the end of the first month, record any necessary adjusting entry.