On April 1, 2017, Sarasota Company sold 23,400 of its 11%, 15-year, $1,000 face value bonds at 96. I

On April 1, 2017, Sarasota Company sold 23,400 of its 11%, 15-year, $1,000 face value bonds at 96. 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, Sarasota 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 $31 per share on March 1, 2018. Prepare the journal entries needed on the books of Sarasota Company to record the following. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and fina 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, 2017: issuance of the bonds. (b) October 1, 2017: payment of semiannual interest. (c) December 31, 2017: accrual of interest expense (d) March 1, 2018: extinguishment of 5,400 bonds. (No reversing entries made.) No. Account Titles and Explanation Debit Credit Date 4/1/17 Cash (a 22464000 Discount on Bonds Payable 936000 Bonds Payable 23400000 x (b) 10/1/17 Interest Expense 1287000 (b) 10/1/17 Interest Expense 1287000 1255800 Cash Discount on Bonds Payable 31200 (c) 12/31/17 Interest Expense Interest Payable 214500 Discount on Bonds Payable 5200 3/1/18 Interest Expense (d) 50167 Interest Payable 49500 Cash 99000 Discount on Bonds Payable 667 (To record payment to retiring bondholders) АААН 3/1/18 Bonds Payable 5400000 Loss on Redemption of Bonds Discount on Bonds Payable Common Stock 1782000 Paid-in Capital in Excess of Par – Common Stock

 

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