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?

Question

Business

Orion Klein

14 April, 09:28

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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Addison Haynes · 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