Carlita began 2014 with an interest payable account balance of $13,000. During 2014, it paid $5,000 in interest to its lenders. On December 31, 2014, what is its interest payable account balance?

• $15,000

• $10,000

• $13,000

• Cannot be calculated

Carlita Company Income Statement for Year Ending December 31, 2014 Sales....... $120,000 Less: Cost of Goods Sold.. 90,000 Gross Margin........ $30,000 Less: Operating Expenses. 10,000 Operating Income.. $20,000 Less: Interest Expense. 2,000 Income Before Taxes... $18,000 Less: Tax Expense. 6,000 Net Income.... $12,000