ACC 206 WEEK 2 ASSIGNMENT 2

ACC 206 WEEK 2 . 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:			
	Case A	Case B	Case C
a.	 Cash inflow on the issuance date	_______	_______	_______
b.	Total cash outflow through maturity	_______	_______	_______
c.	Total borrowing cost over the life of the bond issue 	_______	_______	_______
d.	Interest expense for the year ended December 31, 20X1 	_______	_______	_______
e.	Amortization for the year ended December 31, 20X1 	_______	_______	_______
f.	Unamortized premium as of December 31, 20X1 	_______	_______	_______
g.	Unamortized discount as of December 31, 20X1 	_______	_______	_______
h.	Bond carrying value as of December 31, 20X1 	_______	_______	_______

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