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The Keweenaw Sunshine Development Corporation reported the following for the year ended December 31, 20X1:

[tex]\[
\begin{tabular}{lll}
\hline
& 1/1/X1 & 12/31/X1 \\
\hline
Interest Payable & \[tex]$17,500 & \$[/tex]15,750 \\
Interest Expense & & \$47,750 \\
\hline
\end{tabular}
\][/tex]

How much cash did Keweenaw pay for interest during 20X1?



Answer :

GinnyAnswer
To determine how much cash Keweenaw Sunshine Development Corporation paid for interest during 20X1, we need to follow these steps:

1. Identify the interest payable at the beginning of the year.
2. Identify the interest payable at the end of the year.
3. Determine the interest expense reported for the year.
4. Calculate the interest paid during the year.

### Step-by-Step Calculation:

#### 1. Interest Payable at the Beginning of the Year:
According to the provided information, the interest payable at the beginning of the year (January 1, 20X1) is $17,500.

#### 2. Interest Payable at the End of the Year:
The interest payable at the end of the year (December 31, 20X1) is $15,750.

#### 3. Interest Expense for the Year:
The interest expense for the year is given as:
[tex]\[ \text{Interest Expense} = \[tex]$47,750 - \$[/tex]19,500 = \$28,250 \][/tex]

#### 4. Calculate Interest Paid During the Year:
To find the interest paid during the year, we use the following formula:
[tex]\[ \text{Interest Paid} = \text{Interest Payable at the Beginning} + \text{Interest Expense} - \text{Interest Payable at the End} \][/tex]

Plugging in the numbers:
[tex]\[ \text{Interest Paid} = 17,500 + 28,250 - 15,750 \][/tex]

Perform the arithmetic:
[tex]\[ \text{Interest Paid} = 17,500 + 28,250 = 45,750 \][/tex]
[tex]\[ \text{Interest Paid} = 45,750 - 15,750 = 30,000 \][/tex]

Hence, the cash Keweenaw Sunshine Development Corporation paid for interest during 20X1 is $30,000.

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