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Performed counseling services for $25,200 cash.

On February 1, Year 1, paid $17,400 cash to rent office space for the coming year.

Adjusted the accounts to reflect the amount of rent used during the year.

Required:

Based on this information alone:

Record the events under an accounting equation.

Prepare an income statement, balance sheet, and statement of cash flows for the Year 1 accounting period.

Ignoring all other future events, what is the amount of rent expense that would be recognized in Year 2?

Record the events under an accounting equation.

Note: Do not round intermediate calculations. Enter any decreases to account balances with a minus sign. Leave cells blank if no input is needed.

LIFE, INCORPORATED
Effect of Events on the Accounting Equation
Event	Assets	=	Stockholders Equity
Cash	Prepaid Rent	=	Retained Earnings
1. Performed counseling services	25,200		=	25,200
2. Prepaid rent	(17,400)	17,400	=
3. Used rent			=
Totals	7,800	17,400	=	25,200