Question
On April 1, 2020, Sweet Company sold 22,500 of its 11%, 15-year, $1,000 face value bonds at 97. Interest payment dates are April 1 and
On April 1, 2020, Sweet Company sold 22,500 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, Sweet took advantage of favorable prices of its stock to extinguish 5,400 of the bonds by issuing 178,200 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 $32 per share on March 1, 2021. Prepare the journal entries needed on the books of Sweet 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, 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 5,400 bonds. (No reversing entries made.) No. Date (a) Account Titles and Explanation 4/1/20cash Discount on Bonds Payable Bonds Payable (b) 10/1/20 Interest Expense Discount on Bonds Payable Cash (c) 12/31/20Interest Expense Discount on Bonds Payable Interest Payable (d) 3/1/21 Interest Payable 3/1/21 Interest Expense Discount on Bonds Payable Cash (To record interest and discount on bonds retired) Bonds Payable Loss on Redemption of Bo Discount on Bonds Payable Common Stock Paid-in Capital in Excess of (To record extinguishment of the bonds) Debit Credit
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