Rent expense in Burr Company's income statement is $480,000.If Prepaid Rent was $120,000 on January 1 and is $95,000 on December 31,the cash paid for rent during the year is:

Question

Quizplus · Accepted Answer

The rent expense on the income statement represents the amount of rent that was actually used up or consumed during the year. To determine the cash paid for rent during the year, we need to adjust for any prepaid rent at the beginning and end of the year.

Cash paid for rent = Rent expense - decrease in prepaid rent + increase in prepaid rent
Cash paid for rent = $480,000 - ($95,000 - $120,000)
Cash paid for rent = $455,000

Rent Expense in Burr Company's Income Statement Is $480,000