(Entries for Life Cycle of Bonds) On April 1, 2017, Seminole Company sold 15,000 of its 11%, 15-year, $1,000 face value bonds at 97. Interest payment dates are April 1 and October 1, and the company uses the straight-line method of bond discount amortization. On March 1, 2018, Seminole took advantage of favorable prices of its stock to extinguish 6,000 of thebonds by issuing 200,000 shares of its $10 par value common stock. At this time, the accrued interest was paid in cash. The company’s stock was selling for $31 per share on March 1, 2018.InstructionsPrepare the journal entries needed on the books of Seminole Company to record the following.(a) April 1, 2017: issuance of the bonds.(b) October 1, 2017: payment of semiannual interest.(c) December 31, 2017: accrual of interest expense.(d) March 1, 2018: extinguishment of 6,000 bonds. (No reversing entries made.)
(Entries for Life Cycle of Bonds) On April 1, 2017, Seminole Company sold 15,000 of its 11%, 15-year, $1,000 face
bonds by issuing 200,000 shares of its $10 par value common stock. At this time, the accrued interest was paid in cash. The company’s stock was selling for $31 per share on March 1, 2018.
Instructions
Prepare the
(a) April 1, 2017: issuance of the bonds.
(b) October 1, 2017: payment of semiannual interest.
(c) December 31, 2017: accrual of interest expense.
(d) March 1, 2018: extinguishment of 6,000 bonds. (No reversing entries made.)
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