If selling,general and administrative expenses are $53,600,of which $12,200 is depreciation expense,and beginning prepaid expenses are $3,000,ending prepaid expenses are $5,000,beginning accrued expenses are $17,000,and ending accrued expenses are $20,000,how much cash was paid to employees and service providers?
A)$52,600
B)$40,400
C)$42,400
D)$64,800

Question

Quizplus · Accepted Answer

Selling, general and administrative expenses = $53,600
Depreciation Expense = $12,200

Therefore, Cash expenses = Selling, general and administrative expenses - Depreciation Expense = $53,600 - $12,200 = $41,400

Accrued expenses increased from $17,000 to $20,000, which means $20,000 - $17,000 = $3,000 of expenses were incurred but not yet paid in cash.

Prepaid expenses decreased from $3,000 to $5,000, which means $5,000 - $3,000 = $2,000 of expenses were paid in advance.

Therefore, the actual cash paid to employees and service providers = Cash expenses + Increase in Accrued expenses - Decrease in Prepaid expenses = $41,400 + $3,000 - $2,000 = $42,400.

Hence, the best choice is B.

If Selling,general and Administrative Expenses Are $53,600,of Which $12,200 Is