Question: The following section is taken from Lyons Corp.s balance sheet at December 31, 2013. Current liabilities Interest payable .............. $ 96,000 Long-term liabilities Bonds payable

The following section is taken from Lyons Corp.’s balance sheet at December 31, 2013.
Current liabilities
Interest payable .............. $ 96,000
Long-term liabilities
Bonds payable (8%, due January 1, 2018)... 1,200,000
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, 2014.
(b) Assume that on January 1, 2014, after paying interest, Lyons Corp. calls bonds having a face value of $300,000. The call price is 108. Record the redemption of the bonds.
(c) Prepare the adjusting entry on December 31, 2014, to accrue the interest on the remaining bonds.

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