Bond computations: Straight-line amortization
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: |
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Case A |
Case B |
Case C |
- Cash inflow on the issuance date
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- Total cash outflow through maturity
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- Total borrowing cost over the life of the bond issue
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- Interest expense for the year ended December 31, 20X1
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- Amortization for the year ended December 31, 20X1
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- Unamortized premium as of December 31, 20X1
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- Unamortized discount as of December 31, 20X1
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- Bond carrying value as of December 31, 20X1
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