Howard Inc. had prepaid rent of $75,000 and $80,000 at the end of 2017 and 2018, respectively. During 2018, Howard recorded $240,000 in rent expense in its income statement.

Cash outflows for rent in 2018 were: (A) $250,000. (B) $240,000. (C) $245,000. (D) $235,000.

Question

Luke Morrow

Business

16 March, 07:05

Howard Inc. had prepaid rent of $75,000 and $80,000 at the end of 2017 and 2018, respectively. During 2018, Howard recorded $240,000 in rent expense in its income statement.

Cash outflows for rent in 2018 were: (A) $250,000. (B) $240,000. (C) $245,000. (D) $235,000.

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Answers (1)

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Clinton Bender · Answer 1

Rent recorded in income statement 240,000

Rent prepaid in 2018 80,000

320,000

Less: Rent prepaid in 2017 75,000

Cashflow for rent 245,000

The correct answer is C

Explanation:

In this case, we will add the rent prepaid in 2018 to the amount reported in income statement and deduct rent prepaid in 2017. This gives the cashflow for rent.

Howard Inc. had prepaid rent of $75,000 and $80,000 at the end of 2017 and 2018, respectively. During 2018, Howard recorded $240,000 in rent expense in its income statement.Cash outflows for rent in 2018 were: (A) $250,000. (B) $240,000. (C) $245,000. (D) $235,000.

Howard Inc. had prepaid rent of $75,000 and $80,000 at the end of 2017 and 2018, respectively. During 2018, Howard recorded $240,000 in rent expense in its income statement.

Cash outflows for rent in 2018 were: (A) $250,000. (B) $240,000. (C) $245,000. (D) $235,000.