Question

Life, Inc., experienced the following events in 2018, its first year of operation: 1. Performed counseling services for $25,200 cash. 2. On February 1, 2018. paid $17,400 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 under an accounting equation. b. Prepare an income statement, balance sheet, and statement of cash flows for the 2018 accounting period c. Ignoring all other future events, what is the amount of rent expense that would be recognized in 2019? Complete this question by entering your answers in the tabs below. Reg A Req B1 Inc Stmt Req B2 Bal Sheet Reg B3 CF Stmt Reqc

multi step problem. for the 1st part i didnt know how to get the used rent but thanks for the help!

Answer 1

Part A

Life, Inc. Effect of Events on the Accounting Equation
		Assets	=	Stockholders’ Equity
	Event	Cash	Prepaid rent	=	Retained earnings
1.	Performed Services	25200		=	25200
2.	Prepaid Rent	(17400)	17400	=	NA
3.	Used Rent		(15950)	=	(15950)
Totals		7800	1450	=	9250

17400/12*11 = $15950

Part B 1

Life, Inc. Income Statement For the Year Ended December 31, 2018
Revenue	25200
Expense	15950
Net Income	9250

Part B 2

Life, Inc. Balance Sheet As of December 31, 2018
Assets
Cash	7800
Prepaid Rent	1450
Total Assets		9250
Liabilities
Stockholders’ Equity
Retained Earnings	9250
Total Stockholders’ Equity		9250
Total Liabilities and Stockholders’ Equity		9250

Part B 3

Life, Inc. Statement of Cash Flows For the Year Ended December 31, 2018
Cash Flows From Operating Activities:
Cash Receipt from Revenue	25200
Cash Payment for Rent	17400
Net Cash Flow from Operating Activities		7800
Cash Flows From Investing Activities
Cash Flows From Financing Activities
Net Change in Cash		7800
Plus: Beginning Cash Balance		0
Ending Cash Balance		7800

Part C

Rent expense to be recognized in 2019

$1450

17400/12*1 = $1450