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Use the information below to answer the following: 1/1/X0 12/31/X0 Unearned interest $5,800 $ 5,000 Prepaid interest $ 700 $

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Answer #1

Solution:

Cash paid for interest for the year = Accrual basis interest expense + Ending prepaid interest - Beginning prepaid interest

= $20,000 + $500 - $700 = $19,800

Hence option B is correct.

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