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Prepare Sheffield Corp journal entries

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Reference no: EM132811028

Question - On April 1, 2020, Sheffield Corp. sold 10,000 of its $900 face value, 15-year, 10% bonds at 97. Interest payment dates are April 1 and October 1. The company follows ASPE and uses the straight-line method of bond discount amortization. On March 1, 2021, Sheffield extinguished 2,500 of the bonds by issuing 80,000 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 $31 per share.

Required -

1. Prepare Sheffield Corp.'s journal entry to record the issuance of the bonds on April 1, 2020.

2. Prepare Sheffield Corp.'s journal entry to record the payment of the semi-annual interest on October 1, 2020.

3. Prepare Sheffield Corp.'s journal entry to record the accrual of the interest expense on December 31, 2020.

4. Prepare Sheffield Corp.'s journal entries to record the extinguishment of 2,500 bonds by the issuance of common shares (no reversing entries are made) on March 1, 2021.

Reference no: EM132811028

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