Newbury Books Company reported Insurance Expense for the current year of $38,900. During the same period, the Prepaid Insurance account decreased $5,100. Cash paid for insurance was:

Question

Quizplus · Accepted Answer

The cash paid for insurance can be found by calculating the change in the Prepaid Insurance account and adding it to the Insurance Expense for the year:
Change in Prepaid Insurance = Beginning balance - Ending balance = $0 - (-$5,100) = $5,100 decrease
Cash paid for insurance = Insurance Expense + Change in Prepaid Insurance = $38,900 + $5,100 = $33,800. Therefore, the correct answer is C.

Newbury Books Company Reported Insurance Expense for the Current Year