Question

Red Co. reported cash paid for interest of $55,000 in its statement of cash flows for the current year. Red did not capitalize any interest during the current year. The following changes on their balance sheet occurred: accrued interest payable decreased by $13,000 along with a decrease in prepaid interest of $21,500. What amount should Red report as interest expense in its current year statement of income

Answer 1

$63,500

Step-by-step explanation:

Interest expense paid in cash $55000

Less: Adjusted for accrued interest $13,000

payable

Add: prepaid interest adjusted $21,500

Interest expense in its current year $63,500

statement of income