Southlake corporation issued 900000 of 8 bonds on march 1


Southlake Corporation issued $900,000 of 8% bonds on March 1, 20X1. The bonds pay interest on March 1 and September 1 and mature in 10 years. Assume the independent cases that follow.

  • Case A-The bonds are issued at 100.
  • Case B-The bonds are issued at 96.
  • Case C-The bonds are issued at 105.

Southlake uses the straight-line method of amortization.

Instructions:

Complete the following table:





Case A

Case B

Case C

  1. Cash inflow on the issuance date

_______

_______

_______

  1. Total cash outflow through maturity

_______

_______

_______

  1. Total borrowing cost over the life of the bond issue

_______

_______

_______

  1. Interest expense for the year ended December 31, 20X1

_______

_______

_______

  1. Amortization for the year ended December 31, 20X1

_______

_______

_______

  1. Unamortized premium as of December 31, 20X1

_______

_______

_______

  1. Unamortized discount as of December 31, 20X1

_______

_______

_______

  1. Bond carrying value as of December 31, 20X1

_______

_______

_______

 

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Cost Accounting: Southlake corporation issued 900000 of 8 bonds on march 1
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