Question

17. The following information relates to the West Company: Prepaid Insurance, December 31, 2012, $100,000; Prepaid Insurance, December 31, 2013, $120,000; Insurance Expense for 2013, $500,000. What was the amount of cash West paid for insurance premiums during 2013? a. $720,000 b. $600,000 c. $480,000 d. $520,000 The cost of merchandise sold during the year was $50,000. Merchandise inventories were S12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $5,000 at the beginning and end of the year, resnecti direct method of reporting cash fl 18.

17?

Answer 1

CALCULATION OF THE CASH PAID FOR INSURANCE
PARTICULARS	AMOUNT
Insurance Expenses of the year 2013=	$            5,00,000
Add: Closing balance of Prepaid insurance for December 31, 2013	$            1,20,000
Less: Opening balance of Prepaid insurance of 2013 or Closing balance of Prepaid insurance of December 31, 2012	$            1,00,000
Total Cash paid during the year 2013	$            5,20,000
Answer = Option D = $ 520,000