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Selected transactions on the books of Ayayai Corporation follow: May 1, 2020 Bonds payable with a par value of $700,000, which are dated January 1,
Selected transactions on the books of Ayayai Corporation follow:
May 1, 2020 | Bonds payable with a par value of $700,000, which are dated January 1, 2020, are sold at 107 plus accrued interest. They are coupon bonds, bear interest at 10% (payable annually at January 1), and mature on January 1, 2030. (Use an interest expense account for accrued interest.) | ||
Dec. 31 | Adjusting entries are made to record the accrued interest on the bonds and the amortization of the proper amount of premium. (Use straight-line amortization.) | ||
Jan. 1, 2021 | Interest on the bonds is paid. | ||
April 1 | Par value bonds of $420,000 are repurchased at 101 plus accrued interest and are retired. (Bond premium is to be amortized only at the end of each year.) | ||
Dec. 31 | Adjusting entries are made to record the accrued interest on the bonds, and the proper amount of premium amortized. |
Assume that Ayayai follows ASPE. Prepare the journal entries for the transactions above.
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