The following section is taken from Ohlman Corp.s balance sheet at December 31, 2016. Current liabilities Interest

Question:

The following section is taken from Ohlman Corp.’s balance sheet at December 31, 2016.

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, 2017.

(b) Assume that on January 1, 2017, after paying interest, Ohlman calls bonds having a face value of $600,000. The call price is 103. Record the redemption of the bonds.

Balance Sheet
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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...