The following section is taken from Ohlman Corp.’s at December 31, 2019.
Current liabilities
Interest payable ………………………………………………. $ 112,000
Long-term liabilities
Bonds payable, 7%, due January 1, 2021 ………….. 1,600,000
Bond interest is payable annually on January 1. The bonds are callable on any interest date.
Instructions
a. Journalize the payment of the bond interest on January 1, 2020
b. Assume that on January 1, 2020, after paying interest, Ohlman calls bonds having a of $600,000. The call price is 103. Record the redemption of the bonds.
c. Prepare the entry to record the accrual of interest on December 31, 2020.
