On April 1, 2017, Swifty Company sold 14,400 of its 11%, 15-year, $1,000 face value bonds...

On April 1, 2017, Swifty Company sold 14,400 of its 11%, 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, Swifty took advantage of favorable prices of its stock to extinguish 4,200 of the bonds by issuing 138,600 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 $32 per share on March 1, 2018.

Prepare the journal entries needed on the books of Swifty 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. 38,548. 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 4,200 bonds. (No reversing entries made.)

part

date

account title and explanation

debit

credit

4/1/17

10/1/17

12/31/17

3/1/18

(To record payment to retiring bondholders)

3/1/18

(To record extinguishment of the bonds)

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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