The following section is taken from Hardesty’s at December 31, 2018.
Current liabilities
Interest payable ………………………………………………………… $ 40,000
Long-term liabilities
Bonds payable (8%, due January 1, 2022) ………………….. 500,000
Interest is payable annually on January 1. The bonds are callable on any annual interest date.
Instructions
a. Journalize the payment of the bond interest on January 1, 2019.
b. Assume that on January 1, 2019, after paying interest, Hardesty calls bonds having a of $200,000. The call price is 103. Record the redemption of the bonds.
c. On January 1, 2021, when the carrying value of the bonds was $5,896,000, the company redeemed the bonds at 102. Record the redemption of thebonds assuming that interest for the period has already been paid.
