Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 periods 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). Round to the nearest dollar. Use 360 days for calculations.

General Journal
Date Description Debit Credit
a.
Oct.1 AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer
Bonds Payable Answer Answer
AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer
Issuance of bonds at 100 plus five months' accrued interest.
b.
Nov.1 Bond Interest Payable Answer Answer
AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer
AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer
To record semiannual interest payment.
c.
Dec.31 AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer
AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer
To accrue interest expense.
d.
May 1 Bond Interest Payable Answer Answer
AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer
AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer
To record semiannual interest payment.
e.
May 1 Bonds Payable Answer Answer
AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer
AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer
To record retirement of bonds.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting For Managers Interpreting Accounting Information For Decision Making

Authors: Paul M. Collier, Sandy M. Kizan, Eckhard Schumann

1st Canadian Edition

1118037960, 9781118037966

More Books

Students also viewed these Accounting questions

Question

Define Scientific Management

Answered: 1 week ago

Question

Explain budgetary Control

Answered: 1 week ago

Question

Solve the integral:

Answered: 1 week ago

Question

What is meant by Non-programmed decision?

Answered: 1 week ago

Question

What is Nutriens approach to handling personal information?

Answered: 1 week ago