During the year, the following items were charged to the interest expense account of Doe Corporation:

Interest on additional income taxes assessed two years ago$400Interest on bank loan to finance installation of new machinery. Bank loan was refinanced when installation was completed$700Interest deducted by bank from proceeds of Doe Corporation's 60-day note signed December 1, payable in full 60 days later$500

The maximum amount of interest expense that Doe Corporation, an accrual basis taxpayer, can deduct for the current year is:

Question 13 options:

1)

$1,600

2)

$1,100

3)

$1,350

4)

$700

5)

None of these