Exercise 7-1 Recognizing accrued interest expense [LO 1]

Classic Corporation borrowed $108,000 from the bank on November 1, 2012. The note had an 4 percent annual rate of interest and matured on April 30, 2013. Interest and principal were paid in cash on the maturity date.

Required:

(a)	What amount of interest expense was paid in cash in 2012? (Leave no cells blank - be certain to enter "0" wherever required. Do not round your intermediate calculations and round your final answers to whole dollar amount. Omit the "$" sign in your response.)

Interest expense paid

$

(b)	What amount of interest expense was reported on the 2012 income statement? (Do not round your intermediate calculations and round your final answers to whole dollar amount. Omit the "$" sign in your response.)

Interest expense

$

(c)	What amount of total liabilities was reported on the December 31, 2012, balance sheet? (Do not round your intermediate calculations and round your final answers to whole dollar amount. Omit the "$" sign in your response.)

Total liabilities

$

(d)	What total amount of cash was paid to the bank on April 30, 2013, for principal and interest? (Do not round your intermediate calculations and round your final answers to whole dollar amount. Omit the "$" sign in your response.)

Amount of cash

$

(e)	What amount of interest expense was reported on the 2013 income statement? (Do not round your intermediate calculations and round your final answers to whole dollar amount. Omit the "$" sign in your response.)

Interest expense

$