If prepaid interest at the beginning of the period was zero and at the end of the period was $4,000 and interest expense appears in the statement of comprehensive income for the year as $17,300, how much was paid out in cash for interest during the year?
A)$13,300.
B)$21,300.
C)$17,300.
D)$4,000.

Question

Quizplus · Accepted Answer

The cash paid out for interest during the year is calculated by adding the interest expense for the year to the increase in prepaid interest, then subtracting any increase in interest payable (not mentioned here). Since prepaid interest increased by $4,000 (from $0 to $4,000) and the interest expense was $17,300, the total cash paid out for interest is $17,300 + $4,000 = $21,300.

If Prepaid Interest at the Beginning of the Period Was