According to witnesses and the certificated flight instructor (CFI) of the Cessna 172, he was demonstrating a simulated engine failure on the downwind leg of a left traffic pattern. He closed the throttle, banked the airplane toward the runway, and trimmed it for "best glide speed with flaps retracted." Approaching the runway environment at an approximately 45-degree angle, the CFI attempted to align the airplane with the runway heading while simultaneously flaring it. He then decided to go around, and added full power; however, the airplane touched down on the south side of the runway, "bounced" towards, then crossed the runway, and exited it on the north side. The airplane then struck in-ground lighting, continued up an embankment, and came to rest in tall grass. The wing spar and firewall were damaged, and no mechanical anomalies were noted with the airplane prior to the accident. Winds reported at a station 7 miles to the west, about the time of the accident, were about 60 degrees from the right of the runway, at 10 knots.