The following section is taken from Mareskas balance sheet at December 31, 2020. Current liabilities Interest payable
Question:
The following section is taken from Mareska’s balance sheet at December 31, 2020.
Current liabilities
Interest payable .................................................$ 40,000
Long-term liabilities
Bonds payable (8%, due January 1, 2024) ........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, 2021.
b. Assume that on January 1, 2021, after paying interest, Mareska calls bonds having a face value of $200,000. The call price is 103. Record the redemption of the bonds.
c. Prepare the adjusting entry on December 31, 2021, to accrue the interest on the remaining bonds.
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...
Step by Step Answer:
a Jan 1 Interest Payable 500000 x 08 40000 Cash 40000 b Jan 1 Bonds P...View the full answer
Accounting Principles
ISBN: 978-1119411482
13th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
