reme Autoparts pa

lount of cash Sup

lount of cash Sup

quirement $4.$ How

ount of cash intere

quirement $5.$ How

$2?$ Why does the a

his step, enter the

$2.$Supreme Autoparts Inc. issued $$180,000$ of $7\%,$ five$-$year bonds at a price of $85$ on January $31,201($Note: When the

issue price of bonds is provided, as in this case, you do not need to calculate it yourself; just use the stated price.$).$ The

market interest rate at the date of issuance was $9\%,$ and the standard bonds pay interest semi$-$annually.

Read the requirements.

Requirement $3.$ How much cash did Supreme Autoparts borrow on January $31,20$X$1?$ How much cash will

Supreme Autoparts pay back at maturity on January $31,20$X$6?$

Amount of cash Supreme Autoparts borrowed on January $31,20$X$1$:

Amount of cash Supreme Autoparts will pay back on January $31,20$X$6$:

Requirement $4.$ How much cash interest will Supreme Autoparts pay each six months?

Amount of cash interest Supreme Autoparts will pay each six months:

Requirement $5.$ How much interest expense will Supreme Autoparts report on July $31,20$X$1,$ and on January $31,$

$20$X$2?$ Why does the amount of interest expense increase each period? Explain in detail.

In this step, enter the interest expense amounts Supreme Autoparts will report on July $31,20$X$1,$ and on January $31,$

$202.$

Interest expense Supreme Autoparts will report on July $31,20$X$1$:

Interest expense Supreme Autoparts will report on January $31,20$X$2$:

Why does the amount of interest expense increase each period?

Interest expense increases because the

and the

must be amortized over the life of the bond. The

as the bonds move toward maturity,

bond carrying amount produces