The Victor Company rents numerous properties throughout the year.Victor pays rents in advance in some cases, and in others, rents are paid after the rental period expires.The following data are included in Victor's December 31 balance sheets: $\begin{array}{lll}&2010&2011\
\text { Prepaid Rents } & \$ 70,000 & \$ 30,000 \
\text { Rent Payable } & \$ 50,000 & \$ 35,000
\end{array}$ During 2011, Victor paid $200, 000 in rentals.In its income statement for the year ended December 31, 2011, Victor should report rent expense of

Question

Quizplus · Accepted Answer

To calculate the rent expense for 2011, adjust the cash paid for changes in prepaid rent and rent payable. Start with the $200,000 paid, add the decrease in prepaid rent ($70,000 - $30,000 = $40,000), and subtract the decrease in rent payable ($50,000 - $35,000 = $15,000). Thus, rent expense = $200,000 + $40,000 - $15,000 = $225,000.