Life, Incorporated experienced the following events in Year 1, its first year of operation: 1. Performed counseling services for $25,200 cash. 2. On February 1, Year 1, paid $17,400 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 in accounts under an accounting equation. Note: Enter any decreases to account balances with a minus sign. Event LIFE, INCORPORATED Effect of Events on the Accounting Equation = " Stockholders' Equity Retained Earnings Assets Cash Prepaid Rent 1. Performed services 25,200 25,200 2. Prepaid rent (17,400) 17,400 3. Used rent. (15,950)= (15,950) Totals 7,800 1,450 9,250 b. Prepare an income statement, balance sheet, and statement of cash flows for the Year 1 accounting period. Note: In statement of cash flows, cash outflows should be indicated with a minus sign. LIFE, INCORPORATED Income Statement For the Year Ended December 31, Year 1 Revenue 25,200 Expense (1,950) Net income $ 23,250 Assets Total assets Liabilities Stockholders' Equity LIFE, INCORPORATED Balance Sheet As of December 31, Year 1 Total stockholders' equity Total liabilities and stockholders' equity $ $ 69 0 $ 0 0 LIFE, INCORPORATED Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities: Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash Ending cash balance: $ 0 0 $ 0 c. Ignoring all other future events, what is the amount of rent expense that would be recognized in Year 2? Rent expense to be recognized in Year 2