Question

During the current year, Mainzel Corp.'s income statement shows that the company accrued interest expense of 5,000; for the same period the interest payable balance increased by 300. Cash paid for interest is?

Answer 1

Mainzel Corp. paid $4,700 in cash for interest during the current year, calculated by subtracting the increase in interest payable ($300) from the accrued interest expense of $5,000.

Step-by-step explanation:

The question involves calculating the cash paid for interest by Mainzel Corp. This can be determined using the interest accrued on the income statement and the change in the interest payable balance on the balance sheet.

To find the cash paid for interest:

1. First, take the accrued interest expense shown on the income statement, which is $5,000.
2. Then, account for the increase in the interest payable balance, which went up by $300.
3. Subtract the increase in payable from the accrued expense to find out how much was actually paid in cash: $5,000 - $300 = $4,700.

Therefore, Mainzel Corp. paid $4,700 in cash for interest during the current year.