Ask Question
4 August, 05:59

Vaughn Manufacturing's prepaid insurance was $197000 at December 31, 2021 and $90300 at December 31, 2020. Insurance expense was $62000 for 2021 and $55000 for 2020. What amount of cash disbursements for insurance would be reported in Vaughn's 2021 net cash provided by operating activities presented on a direct basis?

+1
Answers (1)
  1. 4 August, 06:49
    0
    Cash disbursements for insurance would be $ 168,700.

    Explanation:

    In accrual based accounting expenses are recorded when they are incurred. The payment against item purchased does not make it qualified to be recorded as expense. Any advance payment made is recognize as asset untill performance obligation has been completed. So in order to determine amount of payment we will use following accounting equation.

    Payments = Prepaid current period + expenses - opening prepaid balance

    Payments = 197,000 + 62,000 - 90,300 = $ 168,700
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Vaughn Manufacturing's prepaid insurance was $197000 at December 31, 2021 and $90300 at December 31, 2020. Insurance expense was $62000 for ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers