Exercise 3-4A (Algo) Prepaid items on financial statements LO 3-2 Life, Incorporated experienced the following events in Year 1, its first year of operation: 1. Performed counseling services for $31,600 cash. 2. On February 1, Year 1, paid $22,200 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 accounts under an accounting equation. Note: Enter any decreases to account balances with a minus sign. Answer is not complete. LIFE, INCORPORATED Effect of Events on the Accounting Equation Stockholders' Assets Equity Event Cash Prepaid Rent Retained Earnings 1. Performed services 31,600 31,600 2. Prepaid rent (22,200) 22,200 = 3. Used rent (20,167) = Totals 9,400 2,033 = 31,600