Answer:
Flip Flop Inc can still treat Interests as Interest expense and treat penalties as Fees, dues, and subscriptions.
Explanation:
Interest expense is a non-operating expense shown on the income statement. It represents interest payable on any borrowings – bonds, loans, convertible debt or lines of credit. It is essentially calculated as the interest rate times the outstanding principal amount of the debt
Penalties can be categorized under deductible expenses called Fees, dues, and subscriptions.
Levies and other fees paid to an accountant or bank; memberships fees to professional organizations, subscriptions to industry publications and funds paid as penalties are all deductible.
