# Question: Jennings Company reported a balance in its Prepaid Rent Advances

Jennings Company reported a balance in its Prepaid Rent (Advances to Landlord) account of \$1,200 on January 1, 2014, for use of the building for the month of January 2014. On February 1, 2014, the firm paid \$18,000 as the annual rental for the period from February 1, 2014, to January 31, 2015. It recorded this rental payment by debiting Prepaid Rent (Advances to Landlord) and crediting Cash for \$18,000. At the end of 2014, the firm made all proper adjusting entries to correctly report balance sheet and income statement amounts. Using the format of Exhibit 6.12, indicate the effects of all these transactions on the firm’s statement of cash flows for 2014.
Exhibit 6.12.
OPERATIONS
Cash Receipts from Customers . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . (1)
Less: Cash Payments to Suppliers, Employees, and Others. . . . . . . . . . −(2)
Cash Flow from Operations [= (1) – (2)]. . . . . . . . . . . . . . . . . . . . . . . . . −S1
Reconciliation of Net Income to Cash Flow from Operations
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)
Additions to Net Income to Compute Cash Flow from Operations .. . . . . +(4)
Subtractions from Net Income to Compute Cash Flow from Operations . −(5)
Cash Flow from Operations [= (3) + (4) – (5)] . . . . . . . . . . . . . . . . . . . . . . . S1
INVESTING
Proceeds from Dispositions of “Investing” Assets . . . . . . . . . . . . . . . . . . . +(6)
Cash Used to Acquire “Investing” Assets. . . . . . . . . . . . . . . . . . . . . . . . . . −(7)
Cash Flow from Investing [= (6) – (7)] . . . . . . . . . . . . . . . . . . . . . . . . . . .. . S2
FINANCING
Cash Provided by Increases in Debt or Capital Stock . . . . . . . . . . . . . . .. . +(8)
Cash Used to Reduce Debt or Capital Stock . . . . . . . . . . . . . . . . . . . . . . . −(9)
Cash Used for Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . −(10)
Cash Flow from Financing [= (8) – (9) – (10)] . . . . . . . . . . . . . . . . . . . . . . S3
Net Change in Cash [= S1 + S2 + S3]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11)
Cash, Beginning of the Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . S4
Cash, End of the Period [= (11) + S4] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S5

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