Adjustment for Prepaid Rent Jarem Company showed $12,000 in prepaid rent on December 31, 20X1. On December 31, 20X2, the balance in the prepaid rent account was $13,400. Rent expense for 20X2 was $30,000 Required: 1. What amount of cash was paid for rent in 20x2? 2. CONCEPTUAL CONNECTION What adjustment in prepaid expenses is needed if the indirect method is used to prepare Jarem's statement of cash flows? In determining operating cash flow under the indirect method, any increase in a noncash current asset is net income. Thus, since prepaid rent increased by $1,400, this would be net income. The increase in prepaid rent represents in operating cash outflows. Click to watch the Tell Me More Learning Objective 1 video and then answer the questions below. 1. While performing the financial audit of Argon Metals Inc. for the year ended December 31, 20x1, its external auditors noted that the company had issued common stock of $50,000 to acquire land worth $50,000. How should Argon Metals report the transaction on the statement of cash flows? a. The company should report the issue of stock and acquisition of land as investing activities in the statement of cash flows. b. The company should report the issue of stock and acquisition of land as financing activities in the statement of cash flows. c. The company should report the issue of stock and acquisition of land in a supplementary schedule attached to the statement of cash flows. d. The company should report the issue of stock as an investing activity and acquisition of land as a note in a supplementary schedule attached to the statement of cash flows. 2. Which of the following is an example of a cash flow from financing activity? a. Revenue from sales b. Issuing of common stock c. Purchase of long-term assets d. Dividends received from investments in other securities Adjustment for Prepaid Rent Jarem Company showed $12,000 in prepaid rent on December 31, 20X1. On December 31, 20X2, the balance in the prepaid rent account was $13,400. Rent expense for 20X2 was $30,000 Required: 1. What amount of cash was paid for rent in 20x2? 2. CONCEPTUAL CONNECTION What adjustment in prepaid expenses is needed if the indirect method is used to prepare Jarem's statement of cash flows? In determining operating cash flow under the indirect method, any increase in a noncash current asset is net income. Thus, since prepaid rent increased by $1,400, this would be net income. The increase in prepaid rent represents in operating cash outflows. Click to watch the Tell Me More Learning Objective 1 video and then answer the questions below. 1. While performing the financial audit of Argon Metals Inc. for the year ended December 31, 20x1, its external auditors noted that the company had issued common stock of $50,000 to acquire land worth $50,000. How should Argon Metals report the transaction on the statement of cash flows? a. The company should report the issue of stock and acquisition of land as investing activities in the statement of cash flows. b. The company should report the issue of stock and acquisition of land as financing activities in the statement of cash flows. c. The company should report the issue of stock and acquisition of land in a supplementary schedule attached to the statement of cash flows. d. The company should report the issue of stock as an investing activity and acquisition of land as a note in a supplementary schedule attached to the statement of cash flows. 2. Which of the following is an example of a cash flow from financing activity? a. Revenue from sales b. Issuing of common stock c. Purchase of long-term assets d. Dividends received from investments in other securities