Question

Exercise 15-07 a-c

The following section is taken from Sandhill Corp.’s balance sheet at December 31, 2019.

Current liabilities
Interest payable		$   113,400
Long-term liabilities
Bonds payable, 7%, due January 1, 2024		1,620,000

Bond interest is payable annually on January 1. The bonds are callable on any interest date.

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Journalize the payment of the bond interest on January 1, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1
			LINK TO TEXT

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Assume that on January 1, 2020, after paying interest, Ohlman calls bonds having a face value of $533,500. The call price is 104. Record the redemption of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1
			LINK TO TEXT

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Prepare the entry to record the accrual of interest on December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31
			LINK TO TEXT

Question Attempts: 1 of 5 used

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Answer 1

1
Date	Account Titles and Explanation	Debit	Credit
Jan. 1	Interest payable	113400
	Cash		113400
2
Date	Account Titles and Explanation	Debit	Credit
Jan. 1	Bonds payable	533500
	Loss on redemption of bonds	21340
	Cash		554840	=533500*1.04
3
Date	Account Titles and Explanation	Debit	Credit
Dec 31	Interest expense	76055		=(1620000-533500)*7%
	Interest payable		76055

answered by: anonymous