On March 1, 2017, Blossom Company sold 23,000 of its 7%, 20-year, $1,000 face value bonds at 96. Interest payment dates are March 1 and September 1, and the company uses the straight-line method of bond discount amortization. On February 1, 2018, Blossom took advantage of favorable prices of its stock to extinguish 2,750 of the bonds by issuing 149,000 shares of its $1 par value common stock. At this time, the accrued interest was paid in cash. The company’s stock was selling for $19.25 per share on February 1, 2018.

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

(a)		March 1, 2017: issuance of the bonds.
(b)		September 1, 2017: payment of semiannual interest.
(c)		December 31, 2017: accrual of interest expense.
(d)		February 1, 2018: extinguishment of 3,130 bonds. (No reversing entries made.)

 

Transcribed Image Text:

3/1/1/ Cash Discount on Bonds Payable Bonds Payable 9/1/17 Interest Expense Cash Discount on Bonds Payable 2/31/17 Interest Expense Interest Payable Discount on Bonds Payable 2/1/18 Interest Expense Interest Payable Cash Discount on Bonds Payable (To record payment of interest) 3/1/1/ Cash Discount on Bonds Payable Bonds Payable 9/1/17 Interest Expense Cash Discount on Bonds Payable 2/31/17 Interest Expense Interest Payable Discount on Bonds Payable 2/1/18 Interest Expense Interest Payable Cash Discount on Bonds Payable (To record payment of interest)

Answer rating: 100% (QA)

Answer Journal entries Date Particular Debit 23117 Cash 24800000X 98 2... View the full answer