Which items are typically included in a debt schedule and how is interest expense calculated?

• A. Principal repayments only
• B. Beginning balance, new debt, repayments, interest rate; interest expense = debt balance x rate.
• C. Interest expense equals cash paid
• D. Beginning balance and ending balance only

Answer: (B)

A debt schedule is built to show how debt evolves over time and to link that evolution to the cost of borrowing. It should capture the amount outstanding at the start, new borrowings, repayments, and the interest rate applied to the debt. With those pieces, you can calculate interest expense for the period by applying the rate to the outstanding debt.

Why this form is best: including the beginning balance, any new debt, repayments, and the interest rate provides the full picture of how much debt is outstanding during the period and at what cost. Multiplying the debt balance by the rate gives the interest expense for the period, and if there are multiple borrowings, you sum the results across facilities. This aligns with the typical way interest is derived from the debt base.

The other options fall short because they omit essential elements needed to compute interest or confuse cash payments with interest expense (interest expense is not simply cash paid if principal repayments are involved).