Question

Ludwig Company's prepaid rent was $9,500 at December 31, 2020, and $15,000 at December 31, 2021. Ludwig reported rent expense of $23,500 on the 2021 income statement. What amount would be reported in the statement of cash flows as rent paid using the direct method?

Answer 1

Answer:

$29000

Explanation:

Given that

End balance = 15000

Beginning balance = 9500

Expenses = 23500

Recall that

Cash paid = End balance + expenses - beginning balance

Thus

Cash balance = 15000 + 23500 - 9500

= 38500 - 9500

= $29000

Therefore, amount reported in the cash flow = $29000.

Answer 2

Answer: The correct answer is $29,000.

Explanation: Statement of cash flow refers to a part of the financial statement that shows the actual movement of cash in the business for a givene period.

The actual rent to be reflected on the statement of cash flow using the direct method is calculated as ending value + actual expense - opening value

= $15,000.00 + $23,500.00 - $9,500.00

=$29,000.00