Question

2017 , G 15-year, s 1,000 face value bonds at 97. Interest payment dates are April i and October 1, and the company uses the straget fine method of On April 1 , per piny sold 15,300 of its 12 % bond discount amortization. On March 1, 2018, Grouper 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 u al entries needed on the books of Grouper Company to record the following Round inte mediate calculations to 6 deci nal places, e.g. 1.2si 247 and final answers to О decimal places, eg. 38,548. Ir no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount s entered. Do not indent manualy (a) Apnil 1,2017: issuance of the bonds (b) October 1, 2017: payment of semiannual interest. (c) December 31, 2017: accrual of interest expense. (d) Harch 1, 201 8: extinguishment of 6,900 bonds. (İo reversing entries made.) No. Date Account Titles and Explanation (a) 4/1/17 Debit Credit (b) 101/17 (c) 12/31/17

Answer 1

Journal entries
Date	Accounts title and explanations				Debit	Credit
01.04.17	Cash account		(15300000*97%)		14,841,000
	Discount on bonds payable				459,000
	Bonds payable					15300000
01.10.17	Interest Expenses				933,300
	Cash account (15300000*12% *6/12)					918,000
	Discount on bonds payable (459000/30)					15,300
31.12.17	Interest expenses				466650
	Interest payable (15300000*12%*3/12)					459,000
	Discount on Bonds payable (459000/30 * 3/6)					7,650
01.03.18	Interest payable				207,000
	Interest expenses				140300
	Cash account					345000
	Discount on bonds payable					2300
01.03.18	Bonds payable				6900000
	loss on retirement of bonds				808450
	Common Stock capital (227700*10)					2277000
	Additional paid in capital (227700*23)					5237100
	Discount on bonds payable					194350
Note:
Computation of Total interest paid on 6900 bonds and interest expense:
Total Interest paid on mar 01 on 6900 bonds (6900*1000*12%*5/12)							345000
Interest payable on Dec 31 on 6900 bonds (6900*1000*12%*3/12)							207000
Interest expense on 6900 bonds on Mar 01							138000
Discount Amortized for 2 months on 6900 bonds (459000/15300*6900 /30 *2/6)							2300
Total Interest expenses on Mar 01							140300
Note: Loss/gain on retirement of 6900 bonds:
Total price paid by the issue of shares (227700 shares @33)							7514100
Less: Book value of 6900 bonds:
Par value of bonds					6900000
Less: Unamortized discount					194350
	(6900000*3% /180 * 169)
Book value of 6900 bonds							6705650
Loss on retirement of bonds							808450