Clealand Corporation reported interest expense of $45,000 on the income statement for 2017.The beginning balance in interest payable was $10,500 and the ending balance was $3,600.How much should be reported as cash payments for interest on the cash flow statement for 2017?

Question

Quizplus · Accepted Answer

The cash payments for interest can be calculated by starting with the interest expense reported on the income statement and adjusting it for the change in interest payable. The interest expense is $45,000. The beginning balance of interest payable was $10,500, and the ending balance was $3,600, indicating a decrease in the liability of $6,900 ($10,500 - $3,600). To find the actual cash paid for interest, you add this decrease to the interest expense: $45,000 + $6,900 = $51,900.

Clealand Corporation Reported Interest Expense of $45,000 on the Income