Quartz Corporation sold a \(\$ 50\) million, 7 percent bond issue on January 1, 2012. The bonds pay interest each December 31 and mature 10 years from January 1, 2012. For comparative study and analysis, assume three independent selling scenarios: Case A, bonds sold at par; Case B, bonds sold at 98 ; Case C, bonds sold at 102 . Use straight-line amortization and disregard income tax unless specifically required.

\section*{Required:}
1. Complete the following schedule to analyze the differences among the three cases.

2. For each case, explain why the amounts in items \((c),(d)\), and

(e) of (1) are the same or different.

Transcribed Image Text:

a. Cash inflow at the date of issue (sale). b. Total cash outflow through the maturity date. c. Net cash outflow total interest expense over the life of the bonds. d. Total interest expense, net of income tax (25 percent). Income statement for 2012 e. Bond interest expense. Statement of financial position at December 31, 2012, non-current liabilities f. Bonds payable, 7 percent. 9. Unamortized discount.. h. Unamortized premium. 1. Not llability. Case A Case B Case C (Par) (at 98) (at 102)