Question

Castaway Co.
Balance Sheet
Assets:		20X1	20X2
Cash		100,000	100,000
Accounts Receivable		48,000	30,000
Inventory		65,000	50,000
Prepaid Rent		6,000	12,000
Equipment		125,000	300,000
Accumulated Dep		25,000	35,000
BV of Equipment		100,000	265,000
Land		50,000	20,000
Total Assets		$       369,000	$       477,000

Castaway Co.
Income Statement
for 20X2
Revenues		$      200,000
COGS		75,000
Gross Profit		125,000
Insurance Expense		5,000
Rent Expense		6,000
Supplies Expense		5,000
Depreciation Expense		10,000
Interest Expense		8,000
Net Income		$         91,000

What is cash paid for rent? Please use a positive number for your answer, even though it is cash paid.

Answer 1

Solution:

Rent paid for the year = Rent expense + Advance rent paid during the year - Prepaid rent (Opening)

Particulars	Amount in $
Rent Expense For the year	6,000
Add: Prepaid Rent - 20X2	12,000
Less: Prepaid Rent - 20X1	(6,000)
Rent paid for the year	12,000

Rent Paid for the year is $12,000