On I June 20X5, Bridle Corp. issued \($40,000,000\) of 7.5% bonds, with interest paid semi-annually on 30 April and 31 October. The bonds were originally dated 1 November 20X4, and were 15-year bonds. The bonds were issued to yield 8%; accrued interest was received on issuance. The company uses the effective-interest method to amortize the discount. On 31 December 20X5, 10% of the bond issue was retired for 99 plus accrued interest.
Required:
1. Calculate the issue proceeds and the accrued interest. Begin by calculating the present value of the bond at 30 May and 31 October 20X5.
2. Provide the journal entry for 1 June 20X5.
3. Provide the journal entry at 31 October 20X5.
4. Provide the journal entry(ies) at 31 December 20X5.