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Problem:
Kieso Company borrowed $680,000 for five months. The annual interest rate on the loan was 13%. Kieso's fiscal year ends on December 31. Kieso borrowed the $680,000 one month prior to the start of its current fiscal year and paid back the $680,000 plus interest four months into its current fiscal year.
How much interest expense, if any, would Kieso report at the end of its last fiscal year and at the end of its current fiscal year?
Interest Expense
Last Year
Current Year
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