On March 1, 2008, Gordon Corporation purchases $50,000 of 10% bonds of PUA-Tech Corporation, due in 91⁄4 years. The bonds were purchased at a price of $40,000 plus interest of $1,250 ($50,000 × 10% × 3⁄12) accrued from December 1, 2007, the date of the last semiannual interest payment.
(a) Journalize the purchase of the bonds plus accrued interest.
(b) Journalize the entry to record the amortization of the discount on December 31.