Fundamental Financial Accounting Concepts 9th Edition

Exercise 2-15A

Life Inc., experienced the following events in 2016, its first year of operation.

1. Performed counseling services for $36000.00 cash.

2. On February 1, 2016, paid $18000.00 cash to rent office space for the upcoming 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 2016 accounting period.

c. Ignoring all other future events, what is the amount of rent expense that would be recognized in 2017?