Life, Inc., experienced the following events in 2018, its first year of operatio

Question

Life, Inc., experienced the following events in 2018, its first year of operation 2. On February 1, 2018, paid $18,000 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: an acc b. Prepare an income statement c. ignoring all other future events, what is the amount of rent expense that would be recognized in 2019? e sheet, and statement of cash flows for the 2018 accounting period an Req B1 Inc Req B2 Bal Req B3 CF Sheet Stmt Stmt Record the events under an accounting equation. (Do not round intermediate calculations. Enter any decreases to a balances with a minus sign.) on the Accounting Stockh Event 3 Used rent

Explanation / Answer

Solution a:

Solution b1:

Solution b2:

Solution b3:

Solution c:

Amount of rent expense that will be recognized in 2019 = Ending balance in prepaid rent = $1,500

Life Inc. Effect of events on Accounting Equation S. no. Event Assets = Liabilities + Stockholders' Equity Cash Prepaid Rent = Retained Earnings 1 Performed Counseling Services $36,000.00 $36,000.00 2 Prepaid Rent -$18,000.00 $18,000.00 3 Used Rent -$16,500.00 -$16,500.00 Totals $18,000.00 $1,500.00 $19,500.00

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