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Life, Inc, expertenced the following events In 2018, s fist year of operation 1 Performed counseling services for $29.200 cash 2 On February 1, 2018. pald $20,400 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. Req B1 Inc Reg 82 Bal Req 83 CF Sheet Req A Req C Stmt Stmt Record the events 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 LStockholders Assets Prepaid Rent Ketained Ear Event Cash 2 Prepaid rent 3 Used rent Totals Req B1 Inc Stmt >

Answer 1

Answer to Requirement A:

Requirement A + Shareholders Equity - R Assets etained Cash Prepaid Rent Earnings Event 1. Performing counseling services 2. Prepaid Rent (20,400)$20,400 3. Used Rent Totals $ 29,200 $ 29,200 S (18,700)$ (18,700) $8,800 $1,700 10,500 Calculation of Used Rent 1st February to 31st December 2018 Calculation of Used Rent 11 months Calculation of Used Rent (20,400/12) 11 Calculation of Used Rent = $ 18,700

Answer to Requirement B1:

Requirement B1 Life Inc Income Statement 7For the year ended December 31, 2018 Service Revenue Rent expense Net Income Calculation 29,200 $18,700 10,500 (29200- 18700)

Answer to Requirement B2:

Requirement B2 Life Inc Balance Sheet As of December 31, 2018 Assets Cash Prepaid Rent Total assets 8,800 $ 1,700 $10,500 Liabilities Stockholders Equity Retained Earnings10,500 Total Stockholders Equity $ 10,500 Total liabilities and stockholders equity $10,500

Answer to Requirement B3:

Requirement B3 Life Inc Statement of Cash flows For the year ended December 31, 2018 Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash provided by operating activities Increase in Prepaid Rent (0 1700) Net Cash provided by operating activities Cash flows from investing activities Cash flows from financing activities Net change in caslh Cash balance as on 1st January, 2018 Cash balance as on 31st December, 2018 $ 10,500 $ (1,700) 8,800 $ 8,800 $ 8,800 Cash balance as on 31st December, 2018 matches with the cash balance reflecting in the balance sheet

Answer to Requirement C:

Requirement C Rent expense to be recognized in 2019 (We have made payment for rent for the month January 2019 also, the prepaid rent consists of rent to be recognized for the month of January 2019) So, we wil recognize expense of $ 1,700, which is the balance that was remaining in the prepaid rent account. $ 1,700