Ludwig Company's prepaid rent was $9,500 at December 31, 2020, and $15,000 at December 31, 2021. Ludwig reported rent expense of $23,500 on the 2021 income statement. What amount would be reported in the statement of cash flows as rent paid using the direct method?

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Business

Kimberly Lara

17 August, 10:41

Ludwig Company's prepaid rent was $9,500 at December 31, 2020, and $15,000 at December 31, 2021. Ludwig reported rent expense of $23,500 on the 2021 income statement. What amount would be reported in the statement of cash flows as rent paid using the direct method?

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Roman Mason · Answer 1

Answer: The correct answer is $29,000.

Explanation: Statement of cash flow refers to a part of the financial statement that shows the actual movement of cash in the business for a givene period.

The actual rent to be reflected on the statement of cash flow using the direct method is calculated as ending value + actual expense - opening value

= $15,000.00 + $23,500.00 - $9,500.00

=$29,000.00