On April 1 2017 , Seminole Company sold 15,000 of it 11%, 15-year, $1000 face value bonds at 97. Interest payments 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 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 prepare the journal entries 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 1, 2017 accrual of interest expense. d. March 1, 2018 extinguishment of 6000 bonds (No reversing entries made)

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.