In its Year 4 financial statements, Cris Co. reported interest expense of $85,000 in its income statement and cash paid for interest of $68,000 in its cash flow statement. There was no prepaid interest or interest capitalization at either the beginning or the end of Year 4. Accrued interest at December 31, Year 3, was $15,000. What amount should Cris report as accrued interest payable in its December 31, Year 4, balance sheet?

Question

Business

Rachael Vaughan

2 November, 15:17

In its Year 4 financial statements, Cris Co. reported interest expense of $85,000 in its income statement and cash paid for interest of $68,000 in its cash flow statement. There was no prepaid interest or interest capitalization at either the beginning or the end of Year 4. Accrued interest at December 31, Year 3, was $15,000. What amount should Cris report as accrued interest payable in its December 31, Year 4, balance sheet?

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Aryanna Barnett · Answer 1

The $32,000 is the amount which should Cris report as accrued interest payable in its December 31, Year 4, balance sheet

Explanation:

For computing the accrued interest 4, the following steps are to be required which is shown below:

Step 1: First we have to calculate the cash paid for interest for year 4 which is shown below:

= Cash paid for interest under cash flow statement - Accrued interest of year 3

= $68,000 - $15,000

= $53,000

Step 2: Now, the formula is used to compute the interest payable amount which is given below:

= Interest expense - cash paid for interest for year 4

= $85,000 - $53,000

= $32,000

Hence, the $32,000 is the amount which should Cris report as accrued interest payable in its December 31, Year 4, balance sheet