Question
On April 1, 2017, Blossom Company sold32,400of its11%,15-year, $1,000 face value bonds at98. Interest payment dates are April 1 and October 1, and the company
On April 1, 2017, Blossom Company sold32,400of its11%,15-year, $1,000 face value bonds at98. 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, Blossom 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 company's stock was selling for $31per share on March 1, 2018.
Prepare the journal entries needed on the books of Blossom 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.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started