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Therapy Inc. experienced the following events in 2013, its first year of operation:
1. Performed counseling services for $18,000 cash. 2. On February 1, 2013, paid $12,000 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 under an accounting equation. b. Prepare an income statement, balance sheet, and statement of cash flows for the 2013 accounting period. c. Ignoring all other future events, what is the amount of rent expense that would be recognized in 2014?
Prepare a pro forma balance sheet dated December 31, 2008. Discuss the financing changes suggested by the statement prepared in part A.
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