Data Solutions reports operating expenses of $5 million.Operating expenses include rent expense.Prepaid rent at the beginning and end of the year are $120,000 and $80,000,respectively.All other operating expenses were paid in cash as incurred.What is the amount of cash paid for operating expenses?

Question

Quizplus · Accepted Answer

Prepaid rent decreases the amount of cash paid for rent expenses. Therefore, the amount of cash paid for rent expense is $120,000 - $80,000 = $40,000. Subtracting this amount from the total operating expenses of $5 million gives the amount of cash paid for all other operating expenses: $5,000,000 - $40,000 = $4,960,000. Thus, the correct answer is option C.

Data Solutions Reports Operating Expenses of $5 Million