Question

Swifty Corporation's prepaid insurance was $186000 at December 31, 2018 and $89900 at December 31, 2017. Insurance expense was $61300 for 2018 and $53700 for 2017. What amount of cash disbursements for insurance would be reported in Swifty's 2018 net cash provided by operating activities presented on a direct basis

Answer 1

Cash paid for interest = $151,200

Step-by-step explanation:

We know,

If there is a prepaid insurance while calculating cash flow statement (Direct method), we have to use the following formula to calculate the cash paid for interest expenses during the period:

Ending Prepaid Insurance + Interest Expenses - Beginning Prepaid Insurance

Given,

Beginning Prepaid Insurance (December 31, 2017) = $89,900

Ending Prepaid Insurance(December 31, 2018) = $186,000

Interest Expense = $61,300

Therefore, cash paid for Interest = $186,000 + $61,300 - $96,100

Cash paid for interest = $151,200