Tulsa Corp.reported the following information for 2016 and 2017. $\begin{array}{lr}
\text { Interest payable, December } 31,2016 & \$ 5,700 \
\text { Interest payable, December } 31,2017 & 6,200 \
\text { Interest expense-2017 } & 12,250
\end{array}$ How much cash was paid for interest during 2017?
A) $11,750
B) $12,250
C) $12,500
D) $12,750

Question

Quizplus · Accepted Answer

To calculate the cash paid for interest during 2017, we start with the interest expense for the year, then adjust for the change in interest payable. The interest expense for 2017 is $12,250. The interest payable increased from $5,700 at the end of 2016 to $6,200 at the end of 2017, an increase of $500. This increase means that not all of the interest expense resulted in cash payments during the year; $500 of it increased the payable account instead. Therefore, the cash paid for interest is the interest expense minus the increase in interest payable: $12,250 - $500 = $11,750.

Tulsa Corp How Much Cash Was Paid for Interest During 2017? A)

Tulsa Corp How Much Cash Was Paid for Interest During 2017?
A)