Oklahoma Oil Corp. paid interest of $785,000 during 2009, and the interest payable account decreased by $125,000. What was interest expense for the year?

Question

Quizplus · Accepted Answer

Interest expense is calculated as the difference between interest paid and the change in the interest payable account. 
Therefore, interest expense = interest paid - decrease in interest payable = $785,000 - $125,000 = $660,000. Therefore, the correct answer is B) $660,000.