Rent expense in Volusia Company's 2017 income statement is $420,000.If Prepaid Rent was $70,000 at December 31, 2016, and is $95,000 at December 31, 2017, the cash paid for rent during 2017 is:

Question

Quizplus · Accepted Answer

Rent expense for the year is given as $420,000. Prepaid rent at the end of the year 2017 is $95,000. Therefore, rent paid during 2017 can be calculated as follows:

Rent expense during 2017 = Rent paid during 2017 + Prepaid rent at the end of 2017 - Prepaid rent at the beginning of 2017

$420,000 = Rent paid during 2017 + $95,000 - $70,000

Rent paid during 2017 = $420,000 - $95,000 + $70,000 
Rent paid during 2017 = $395,000

Therefore, the cash paid for rent during 2017 is $395,000. However, this is not an option in the given choices. The closest option is B) $445,000, which is $50,000 more than the actual amount paid. It is possible that the company paid rent in advance for the future periods, which caused the difference.

Rent Expense in Volusia Company's 2017 Income Statement Is $420,000