Question 1 On March 1 2017 Wildhorse Company sold 24100 of i

Question 1 On March 1, 2017, Wildhorse Company sold 24,100 of its 9%, 20-year, $1,000 face value bonds at 98 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, wildhorse took advantage of favorable prices of its stock to ext ng 2,770 of the bonds r issuing 151,200 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 $19.75 per share on February 1, 2018. Prepare the journal entries needed on the books of Wildhorse Company to record the following. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select \"No Entry\" for the account titles and enter o for the amounts.) (a) (b) (c) (d) March 1, 2017: issuance of the bonds. September 1, 2017: payment of semiannual interest. December 31, 2017: accrual of interest expense. February 1, 2018: extinguishment of 2,770 bond (No reversing entries made.) Date Account Titles and Explanation Debit Credit 12/31/17

Solution

Date Accounts Title Dr Cr 3/1/2017 Cash (24100*1000*98%) 23618000 a Discount on Bonds pyable 482000 Bonds payable (24100*1000) 24100000 9/1/2017 Interest expenses 1072450 b Discount on Bonds pyable 12050 Cash (24100000*4.5%) 1084500 (to record payment of interest) working Bond amortization amount 12050 482000/40 Dec 31 2017 Interest expenses 714967 c Discount on Bonds pyable (12050*4/6) 8033 Interest payable (24100000*4.5%*4/6) 723000 (to record interest accured) Feb 1 2018 d Interest expenses 178742 Discount on Bonds pyable (12050*1/6) 2008 Interest payable 723000 Cash (24100000*4.5%*5/6) 903750 (to record payment of interest) Feb 1 2018 Bonds Payable (2770*1000) 2770000 Loss on Redemption of bOnds (bal fig) 162070 Discount on Bonds pyable 54130 Common stock (151200*1) 151200 Paid in capital in excess of par- Common Stock 2835000 (151200*18.75) Unamoritzed discount Total discount on 2770 bnds 55400 482000*2770/24100 Discount for 11 months amortized 1270 55400/40*11/12 Unamoritzed discount 54130 If any doubt please comment