The Ling Corporation reported a beginning balance of $1,200 in its Prepaid Insurance account.During the year,a total of $16,000 was recognized as insurance expense and the Prepaid Insurance account had an ending balance of $1,600.How much cash did Ling pay for insurance during the year?

Question

Quizplus · Accepted Answer

The change in the Prepaid Insurance account can be calculated as follows:
Beginning balance + Cash paid for insurance - Insurance expense = Ending balance
$1,200 + Cash paid for insurance - $16,000 = $1,600
Rearranging the above equation, we get:
Cash paid for insurance = Ending balance - Beginning balance + Insurance expense
= $1,600 - $1,200 + $16,000
= $16,400
Therefore, the answer is C) $16,400.

The Ling Corporation Reported a Beginning Balance of $1,200 in Its