Use the following amortization table for Zappits Autoparts to answer these quest

Question

Use the following amortization table for Zappits Autoparts to answer these questions about the company's long-term debt: (Click the icon to view the amortization table.) 1. How much cash did Zappits Autoparts borrow on January 31, 2017? How much cash will Zappits Autoparts pay back at maturity on January 31, 2027? 2. How much cash interest will Zappits Autoparts pay each six months? 3. How much interest expense will Zappits Autoparts report on July 31, 2017, and on January 31, 2018? Why does the amount of interest expense increase each period? Explain in detail. 1. How much cash did Zappits Autoparts borrow on January 31, 2017? How much cash will Zappits Autoparts pay back at maturity on January 31, 2027? How much cash did Zappits Autoparts borrow on January 31, 2017? $ How much cash will Zappits Autoparts pay back at maturity on January 31, 2027? $0 2. How much cash interest will Zappits Autoparts pay each six months? $ 3. How much interest expense will Zappits Autoparts report on July 31, 2017, and on January 31, 2018? Why does the amount of interest expense increase each period? Explain in detail. How much interest expense will Zappits Autoparts report on July 31, 2017? $ How much interest expense will Zappits Autoparts report on January 31, 2018? $0 Why does the amount of interest expense increase each period? must be amortized over the life of the Interest expense increases because the bond. bond carrying amount produces as the bonds move toward maturity and the amount of interest expense each period. i Amortization table Interest | Payment Interest Expense | Discount | Amortization Amortization Discount Carrying Semi-annual Interest Date Jan 31, 2017 July 31, 2017 Jan 31, 2018 July 31, 2018 Bond Discount Carrying Balance Amount 19,200 $ 140,800 17,472 142,528 15,684 144,316 13,833 146,167 $ 4,928 $ 1,728 3,200 $ 3,200 3,200 4,988 1,788 5,051 1 ,851 Print Done Enter your answer in each of the answer boxes.

Explanation / Answer

Rreq 1: Zappits Autoparts borrow on Jan 31 20174 $ 140800 Zappits Autoparts will pay back at maturity on Jan31 2027 the amount of $160000 (i.e. 140800+19200) Req 2: Cash interest paid each sic month by Zappits is $ 3200 Req 3: Interest expense Zappits reports on July 31 2017 is $ 4928 Interest expense Zappits reports on Jan31 2018 is $ 4988 Interest expense increases because the carrying value of bonds increases as the bonds move towards the maturity and the Unamortized discount must be amortized over the life of the bonds Increased bond carrying amount produces higher interest expense for each period.

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