Question
14-7 On April 1, 2017, Skysong Company sold28,800of its12%,15-year, $1,000 face value bonds at97. Interest payment dates are April 1 and October 1, and the
14-7
On April 1, 2017, Skysong Company sold28,800of its12%,15-year, $1,000 face value bonds at97. 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, Skysong took advantage of favorable prices of its stock to extinguish4,200of the bonds by issuing138,600shares of its $10 par value common stock. At this time, the accrued interest was paid in cash. The companys stock was selling for $30per share on March 1, 2018.
Prepare the journal entries needed on the books of Skysong Company to record the following.(Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
(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 of4,200bonds. (No reversing entries made.)
No.
Date
Account Titles and Explanation
Debit
Credit
(a)
4/1/17
(b)
10/1/17
(c)
12/31/17
(d)
3/1/18
(To record paymentto retiring bondholders)
3/1/18
(To record extinguishment of the bonds)
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