Exercise 2-15A Prepaid items on financial statements LO 2-6 Life, Inc. experienced the following events in Year 1, its first year of operation: 1. Performed counseling services for $36,000 cash. 2. On February 1, Year 1, 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: 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 Req B Stmt of Sheet Cash Flows Reqc Record the events in general ledger accounts under an accounting equation. (Do not round intermediate any decreases to account balances with a minus sign.) = LIFE, INC. Effect of Events on the Accounting Equation Assets Stockholders' Equity Event Cash Retained Prepaid Rent Earnings 1. Performed services 2. Prepaid rent 3. Used rent Totals 0 0 = 0 Prepare an income statement for the Year 1 accounting period. (Do not round intermediate calculations.) LIFE, INC. Income Statement For the Year Ended December 31, Year 1 $ 0 Prepare an balance sheet for the Year 1 accounting period. (Do not round intermediate calculations.) 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 $ Prepare an statement of cash flows for the Year 1 accounting period. (Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign.) 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 Ignoring all other future events, what is the amount of rent expense that would be recognized in Year 2? (Do not round intermediate calculations.) Rent expense to be recognized in Year 2