Problem 14-7 On April 1, 2017, Sweet Company sold 15,300 of its 12%, 15-year, $1,000 face...

 

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Problem 14-7 On April 1, 2017, Sweet Company sold 15,300 of its 12%, 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, 2018, Sweet took advantage of favorable prices of its stock to extinguish 6,900 of the bonds by issuing 227,700 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 $33 per share on March 1, 2018. 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. 38,518. 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 21, 2017: accrual of interest expense. (d) March 1, 2018: extinguishment of 6,900 bands. (No reversing entries made.) No. Date Account Titles and Explanation (a) (b) 10/1/17 (c) 12/31/17 (d) 3/1/16 3/1/16 (To record payment to retiring bondholders) (To record extinguishment of the bonds) Debit Credit Problem 14-7 On April 1, 2017, Sweet Company sold 15,300 of its 12%, 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, 2018, Sweet took advantage of favorable prices of its stock to extinguish 6,900 of the bonds by issuing 227,700 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 $33 per share on March 1, 2018. 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. 38,518. 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 21, 2017: accrual of interest expense. (d) March 1, 2018: extinguishment of 6,900 bands. (No reversing entries made.) No. Date Account Titles and Explanation (a) (b) 10/1/17 (c) 12/31/17 (d) 3/1/16 3/1/16 (To record payment to retiring bondholders) (To record extinguishment of the bonds) Debit Credit

Answer rating: 100% (QA)

Sweet Company Journal entries Date Account Titles and Explanation 1Apr17 Cash Discount on Bonds Paya... View the full answer