Park Corp had a beginning balance in its prepaid rent account of $10,000 and an ending balance of $7,500.Rent expense for the year was $12,000.How much cash did Park pay for rent during the year?
A)$14,500
B)$9,500
C)$12,000
D)$7,500

Question

Quizplus · Accepted Answer

The beginning balance in the prepaid rent account is not relevant to determine the cash paid for rent during the year. To calculate the cash paid, we need to adjust the rent expense for the change in prepaid rent. The adjustment is:

Ending prepaid rent balance = Beginning prepaid rent balance - Rent expense + Cash paid for rent
$7,500 = $10,000 - $12,000 + Cash paid for rent
Cash paid for rent = $9,500

Park Corp Had a Beginning Balance in Its Prepaid Rent