The following section is taken from Ohlman Corp.'s balance sheet at December 31, 2019. Current liabilities Interest

Question:

The following section is taken from Ohlman Corp.'s balance sheet 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 face value 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.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...

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