Question

A company reports operating expenses of $5 million. Operating expenses include rent expense. Prepaid rent at the beginning and end of the year is $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?

Answer 1

The correct answer is: "4.960.000"

Step-by-step explanation:

Since the rent expense is included in the operating expenses and there was a prepaid rent balance amortized of 40.000 (Difference between the beginning balance and the ending balance 120.000- 80.000) . You have to deduct from the total of the operating expenses the amount of the prepaid rent amortized. 5.000.000-40.000. Hope it helps