P10-7A. Bonds Payable Journal Entries; Issued at Par Plus Accrued Interest Ashton, Inc., which close

P10-7A. Bonds Payable Journal Entries; Issued at Par Plus Accrued Interest Ashton, Inc., which closes its books on December 31, is authorized to issue $800,000 of nine percent, 20-year bonds dated May 1, with interest payments on November 1 and May 1.

Required

Prepare journal entries to record the following events, assuming that the bonds were sold at 100 plus accrued interest on October 1:

a. The bond issuance

b. Payment of the first semiannual period's interest on November 1.

c. Accrual of bond interest expense at December 31.

d. Payment of the semiannual interest on May 1 of the following year.

e. Retirement of $400,000 of the bonds at 101 on May 1, Year 2 (immediately after the interest payment on that date).

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