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Prepare company journal entries to record the extinguishment

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On April 1, 2020, Martinez Corp. sold 11,400 of its $1,000 face value, 15-year, 10% bonds at 92. Interest payment dates are April 1 and October 1. The company uses the effective interest method. On March 1, 2021, Martinez extinguished 2,850 of the bonds by issuing 95,100 shares. At this time, the accrued interest was paid in cash to the bondholders whose bonds were being extinguished. In a separate transaction on March 1, 2021, 120,000 of the company's shares sold for $30 per share.

Question:

Question 1) Provide an effective interest table for the bonds for two interest payment periods (Oct 1, 2020 and April 1, 2021).

Question 2) Prepare the company's journal entries to record the extinguishment of 2850 bonds by the issuance of common shares, on March 1, 2021

Reference no: EM132482922

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