Question

Ludwig Company's prepaid rent was $6,000 at December 31, 2017, and $15,000 at December 31, 2018. Ludwig reported rent expense of $22,000 on the 2018 income statement. What amount would be reported in the statement of cash flows as rent paid using the direct method

Answer 1

$31,000

Step-by-step explanation:

The computation of the amount reported in the statement of cash flows as rent paid using the direct method is shown below:

= Ending prepaid rent balance + rent expense reported - beginning balance of prepaid rent

= $15,000 + $22,000 - $6,000

= $31,000

We simply applied the above formulas so that the amount of rent paid could come and the same is shown in the operating activities section of the cash flow statement