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P10-7A. Bonds Payal ds Payable Journal Entries; Issued at Par Plus Accrued Interest Ashton, Inc., which closes 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 1 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). Curyemination RODE DUTTI I TIU TONOWIng data u Trom the curent secounting reconstrumo funuvaly. $.00 Cao Accounts receivable (not of allowance of 40).... Inventory................................... Other current assets............ Accounts payable .......... Other current liabilitie.................................................. 200 450 80 110 170 The president of the company is coneered that the company is immolation of a debt covenant requires the company to maintain a minimum current ratio of 2.0. He believes the best way to rec this is to reverse a bad debt write-off in the amount of sto that the N o rded Heary that the write-off was done too early, and that the collections departmentsheula be r ore tim comicolo outstanding receivables. The CFO argues that this will have no effect on the current

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