Question

Item17 3 points Time Remaining 36 minutes 46 seconds 00:36:46 Item 17 Item 17 3 points Time Remaining 36 minutes 46 seconds 00:36:46 A company reports operating expenses of $5 million. Operating expenses include rent expense. Prepaid rent at the beginning and end of the year is $120,000 and $80,000, respectively. All other operating expenses were paid in cash as incurred. What is the amount of cash paid for operating expenses? Multiple Choice $5,000,000. $5,040,000. $4,960,000. $5,080,000.

Answer 1

Answer:

$4,960,000

Explanation:

The rent was prepaid therefore, it is an accrued expense It do not involve the disbursement of cash for this period.

Rent expense will be the difference between beginning and ending prepaid rent:

120,000 - 80,000 = 40,000 rent expense

This will be reduced from the operating expenses:

operating expense - accrued expense = cash expenses

5,000,000 - 40,000 = 4,960,000 cash used for operating expenses