Respuesta :
Paid interest of $785,000 during 2021, and the interest payable account decreased by $125,000. The interest expense for the year is $555,000.
interest expense = 785000 - 125000 x 2
= 555000
What is interest expense?
Cost of borrowing money is related to interest expense. It is the fee a lender assesses to a borrower in exchange for using the lender's funds. The cost of borrowing money from banks, bond investors, and other sources can be shown as interest expense on the income statement.
For illustration, suppose a company borrows $1,000 on September 1 with a 4% monthly interest charge. ($1000 x 4%) means that the interest cost for September will be $40. On October 1, the company repays the loan in full with a $500 payment. The interest cost for October will be $20 (500 x 4%).
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