Pickering Company's prepaid insurance was $8,500 at December 31, 2015, and $12,500 at December 31, 2016. Pickering reported insurance expense of $18,500 on the 2016 income statement. What amount would be reported in the statement of cash flows as insurance paid using the direct method?
$18,500.
$22,500.
$27,000.
$14,500.