Rent expense in Marrin Company's 2018 income statement is $420,000.If Prepaid Rent was $70,000 at December 31,2017,and is $95,000 at December 31,2018,the cash paid for rent during 2018 is:

Question

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The rent expense recorded in the income statement is $420,000, but this does not necessarily represent the cash paid for rent. To determine the cash paid for rent, adjustments need to be made for the prepaid rent account. Prepaid rent was $70,000 at December 31, 2017, and increased to $95,000 at December 31, 2018. The change in prepaid rent from 2017 to 2018 is $25,000 (an increase), which means that $25,000 of the rent expense recorded in 2018 was actually paid in 2017. To calculate the cash paid for rent during 2018, we need to subtract this $25,000 from the rent expense of $420,000 and then add the change in prepaid rent ($95,000 - $70,000 = $25,000).

$420,000 - $25,000 + $25,000 = $420,000

Therefore, the cash paid for rent during 2018 is $445,000 (option B).

Rent Expense in Marrin Company's 2018 Income Statement Is $420,000