Question: The following section is taken from Koster Corp.s balance sheet at December 31, 2011. Current liabilities Interest payable.. $ 72,000 Long-term liabilities Bonds payable, 9%,

The following section is taken from Koster Corp.’s balance sheet at December 31, 2011.

Current liabilities

Interest payable………………………………….. $ 72,000

Long-term liabilities

Bonds payable, 9%, due January 1, 2016……….1,600,000

Bond interest is payable semiannually on January 1 and July 1. The bonds are callable on any interest date.

Instructions

(a) Journalize the payment of the bond interest on January 1, 2012.

(b) Assume that on January 1, 2012, after paying interest, Koster calls bonds having a face value of $600,000. The call price is 104. Record the redemption of the bonds.

(c) Prepare the entry to record the payment of interest on July 1, 2012, assuming no previous accrual of interest on the remaining bonds.

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