Question

105) Howard Inc. had prepaid rent of $75,000 and $80,000 at the end of 2020 and 2021, respectively. During 2021, Howard recorded $240,000 in rent expense in its income statement. Cash outflows for rent in 2021 were:

Answer 1

Answer:

$245,000

Explanation:

The cash outflow in respect of the Prepaid rent of Howard Inc. for the year 2021 shall be determined using the following mentioned equation:

Cash outflow during the 2021=Rent expense for the 2021+end balance of prepaid rent for 2021-ending balance of prepaid rent at 2020

Cash outflow during the 2021=$240,000+$80,000-$75,000

                                                   =$245,000