Life, Inc. experienced the following events in Year 1, its first year of operation: 1. Performed counseling services for $26,800 cash. 2. On February 1, Year 1, paid $18,600 cash to rent office space for the coming year. 3. Adjusted the accounts to reflect the amount of rent used during the year. Required Based on this information alone: a. Record the events in general ledger accounts under an accounting equation. b. Prepare an income statement, balance sheet, and statement of cash flows for the Year 1 accounting period. c. Ignoring all other future events, what is the amount of rent expense that would be recognized in Year 2? Complete this question by entering your answers in the tabs below. Req A Req B Inc Stmt Req B Bal Sheet Req B Stmt of Cash Flows Reqc Record the events in general ledger accounts under an accounting equation. (Do not round intermediate calculations. Enter any decreases to account balances with a minus sign.) LIFE, INC. Effect of Events on the Accounting Equation Stockholders' Assets Equity Event Retained Cash Prepaid Rent = Earnings 1. Performed services 2. Prepaid rent 3. Used rent Totals 0 0 =
Req A Req B Inc Stmt Req B Bal Sheet Req B Stmt of Cash Flows Reqc Prepare an income statement for the Year 1 accounting period. Do not rou LIFE, INC. Income Statement For the Year Ended December 31, Year 1
LIFE, INC. Balance Sheet As of December 31, Year 1 Assets $ 0 Total assets Liabilities Stockholders' Equity 0 Total stockholders' equity Total liabilities and stockholders' equity $ 0
LIFE, INC. Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities: $ 0 Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash 0 Ending cash balance 0
Rent expense to be recognized in Year 2