On April 1, 2015, Sarkar Company sold 15,000 of its 11%, 15-year, R\($1\),000 face value bonds to yield 12%. Interest payment dates are April 1 and October 1. On April 2, 2016, Sarkar took advantage of favorable prices of its shares to extinguish 6,000 of the bonds by issuing 200,000 of its R\($10\) par value ordinary shares. At this time, the accrued interest was paid in cash. The company’s shares were selling for R\($31\) per share on April 2, 2016.

Instructions Prepare the journal entries needed on the books of Sarkar Company to record the following.

(a) April 1, 2015: issuance of the bonds.

(b) October 1, 2015: payment of semiannual interest.

(c) December 31, 2015: accrual of interest expense.

(d) April 2, 2016: extinguishment of 6,000 bonds. (No reversing entries made.)