On April 1, 2020, Seminole Company sold 15,000 of its 11%, 15-year, $1,000 face value bonds at
Question:
On April 1, 2020, 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, 2021, Seminole took advantage of favorable prices of its stock to extinguish 6,000 of the 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, 2021.
Instructions
Prepare the journal entries needed on the books of Seminole Company to record the following.
a. April 1, 2020: issuance of the bonds.
b. October 1, 2020: payment of semiannual interest.
c. December 31, 2020: accrual of interest expense.
d. March 1, 2021: extinguishment of 6,000 bonds. (No reversing entries made.)
Face ValueFace value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
Step by Step Answer:
a b c d At March 1 2021 the carrying amount of the retired ...View the full answer
Intermediate Accounting
ISBN: 978-1119503668
17th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel
