The following information relates to the Davenport Company: $\begin{array}{ll}
\text { Accrued interest payable, begining of period }&\$60\
\text { Prevaidinterest end of period.}&40\
\text { Accrued interest payable, end of period } & 10 \
\text { Total interest expense reported on the income statement } & 750 \
\text { Prepaid interest, beginning of period } & 70
\end{array}$
What was the amount of cash payments for interest?
A)$720
B)$730
C)$750
D)$770

Question

The following information relates to the Davenport Company: $\begin{array}{ll}
\text { Accrued interest payable, begining of period }&\$60\
\text { Prevaidinterest end of period.}&40\
\text { Accrued interest payable, end of period } & 10 \
\text { Total interest expense reported on the income statement } & 750 \
\text { Prepaid interest, beginning of period } & 70
\end{array}$
 What was the amount of cash payments for interest?
A)$720
B)$730
C)$750
D)$770

Quizplus · Accepted Answer

To find the cash payments for interest, we adjust the total interest expense by the changes in accrued and prepaid interest. The calculation is as follows: Total interest expense ($750) + Beginning accrued interest ($60) - Ending accrued interest ($10) - Beginning prepaid interest ($70) + Ending prepaid interest ($40) = $770. However, the correct calculation should be: Total interest expense ($750) + Increase in accrued interest payable ($10 - $60 = -$50) + Decrease in prepaid interest ($70 - $40 = $30) = $750 - $50 + $30 = $730.

The Following Information Relates to the Davenport Company What Was the Amount of Cash Payments for Interest? A)$720

The Following Information Relates to the Davenport Company What Was the Amount of Cash Payments for Interest?
A)$720