O13-2 Exercise 13-16B Recording prepaid items and identifying their effect on financial statements Virginia Mining began operations by issuing common stock for $150,000. The company paid $135,000 cash in advance for a one-year contract to Icase machinery for the business. The lease agreement was signed on March 1. Year 1, and was effective immediately, Virginia Mining received $172.500 of cash revenue in Year 1. Required a. Record the March 1 cash payment in general journal format. b. Record in general journal format the adjustment required as of December 31. Year I. a. & b. Virginia Mining Journal Entries for Year 1 Date Account Titles Debit Credit EXERCISE 13-16B (cont.) c. Show all Year events in a horizontal statements model like the following one: Balance Sheet Income Statement Assets - Llab. + Stk. Equity Statement of Cash Flows Cash + Prep. Rent - Com. Stk. + Ret. Earn. Rev. - Exp. = Net Inc. Virginia Mining Horizontal Statements Model for Year 1 Assets Liab. Income Statement Statement Event Stk. Equity Comm. Ret. Earn Stock Cash Prepaid Rent + + Revenue - Expense = Net Inc. Cash Flows Adi. Ral EXERCISE 13-16B (cont.) d. What amount of net income would be reported on the Year 1 income statement? What is the amount of net cash flow from operating activities for Your I? e. Determine the amount of prepaid rent that would be reported on the December 31, Year 1, balance sheet