The following section is taken from Hardesty's balance sheet at December 31, 2018. Current liabilities Interest payable

Question:

The following section is taken from Hardesty's balance sheet at December 31, 2018.

Current liabilities
Interest payable .................................................................. $ 40,000
Long-term liabilities
Bonds payable (8%, due January 1, 2022) ....................... 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, 2019.

b. Assume that on January 1, 2019, 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. On January 1, 2021, when the carrying value of the bonds was $5,896,000, the company redeemed the bonds at 102. Record the redemption of thebonds assuming that interest for the period has already been paid.

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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