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Northern Corporation issued $800,000 of 7% bonds on March 1, 20X8. 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

Cash inflow on the issuance date
_______

_______

_______

Total cash outflow through maturity
_______

_______

_______

Total borrowing cost over the life of the bond issue
_______

_______

_______

Interest expense for the year ended December 31, 20X8
_______

_______

_______

Amortization for the year ended December 31, 20X8
_______

_______

_______

Unamortized premium as of December 31, 20X8
_______

_______

_______

Unamortized discount as of December 31, 20X8
_______

_______

_______

Bond carrying value as of December 31, 20X8
_______

_______

_______

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  • Category:- Accounting Basics
  • Reference No.:- M915391

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