Pickering Company's prepaid insurance was $8,000 at December 31, 2008, and $10,000 at December 31, 2009. Pickering reported insurance expense of $15,000 on the 2009 income statement. What amount would be reported in the statement of cash flows as insurance paid using the direct method?

Question

Quizplus · Accepted Answer

The insurance paid can be calculated as: Beginning prepaid insurance ($8,000) + Insurance expense ($15,000) - Ending prepaid insurance ($10,000) = $13,000 + $15,000 - $10,000 = $17,000.

Pickering Company's Prepaid Insurance Was $8,000 at December 31, 2008