P$14-7$B $($L$03,4,5)($Entries for Life Cycle of Bonds$)$ On June $1,2017,$ Royal Palm Company sold $6,000$ of its $6\%,20-$year, $$1,000$ face value bonds at $96.$ Interest payment dates are December $1$ and June $1,$ and the company uses the straight$-$line method of bond discount amortization. On February $1,2018,$ Royal Palm took advantage of favorable prices of its stock to extinguish $4,000$ of the bonds by issuing $500,000$ shares of its $$1$ par value common stock. At this time, the accrued interest was paid in cash. The company$$s stock was selling for $$8\mathrm{.}50$ per share on February $1,2018.$

Instructions

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

$($a$)$ June $1,2017$: issuance of the bonds.

$($b$)$ December $1,2017$: payment of semiannual interest.

$($c$)$ December $31,2017$: accrual of interest expense.

$($d$)$ February $1,2018$: extinguishment of $4,000$ bonds. $($No reversing entries made.$)$