The Joseph, Inc. uses the accrual basis of accounting. Joseph's insurance expense account had a $23,000 balance at the end of the year. The prepaid insurance account had a $6,000 balance at the beginning of the year and a $3,000 balance at the end of the year. How much cash was paid for insurance during the year?

21000

29000

21000

To calculate the cash paid for insurance during the year, we need to consider the changes in the prepaid insurance account.

First, let's determine the change in the prepaid insurance account:

Prepaid insurance at the beginning of the year = $6,000
Prepaid insurance at the end of the year = $3,000

Change in prepaid insurance = Prepaid insurance at the end of the year - Prepaid insurance at the beginning of the year
= $3,000 - $6,000
= -$3,000 (negative because the balance decreased)

Since the prepaid insurance balance decreased by $3,000, it means that $3,000 worth of prepaid insurance was used during the year.

Now, let's calculate the cash paid for insurance:

Insurance expense at the end of the year = $23,000
Change in prepaid insurance = -$3,000

Cash paid for insurance = Insurance expense at the end of the year + Change in prepaid insurance
= $23,000 + (-$3,000)
= $20,000

Therefore, $20,000 in cash was paid for insurance during the year.