p14 7b l03 4 5 entries for life cycle of bonds on june 1 2017 royal palm company sol 3733545

(Entries for Life Cycle of Bonds) On June 1, 2017,Royal Palm Company sold 6,000 of its 6%, 20-year, $1,000 face valuebonds at 96. Interest payment dates are December 1 and June 1, andthe company uses the straight-line method of bond discountamortization. On February 1, 2018, Royal Palm took advantage offavorable prices of its stock to extinguish 4,000 of the bonds byissuing 500,000 shares of its $1 par value common stock. At thistime, the accrued interest was paid in cash. The company’s stockwas selling for $8.50 per share on February 1, 2018.

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