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The following section is taken from Hardesty's balance sheet at December 31, 2019. Current liabilities Interest payable $ 40,000 Long-term liabilities Bonds payable (8%, due
The following section is taken from Hardesty's balance sheet at December 31, 2019.
Current liabilities | ||
Interest payable | $ 40,000 | |
Long-term liabilities | ||
Bonds payable (8%, due January 1, 2023) | 500,000 |
Interest is payable annually on January 1. The bonds are callable on any annual interest date.
(a) | Journalize the payment of the bond interest on January 1, 2020. | |
(b) | Assume that on January 1, 2020, after paying interest, Hardesty 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, 2020, to accrue the interest on the remaining bonds. |
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