Exercise 10-13 The following section is taken from Ohlman Corp.\'s balance sheet

Question

Exercise 10-13 The following section is taken from Ohlman Corp.'s balance sheet at December 31, 2014 Current liabilities Interest payable $ 41,900 Long-term liabilities Bonds payable, 5%, due January 1, 2019 1,676,000 Bond interest is payable semiannually on January 1 and July 1. The bonds are callable on any interest date Your answer is correct. Journalize the payment of the bond interest on January 1, 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1TInterest Payable 41900 Cash 41900 SHOW LIST OF ACCOUNTSSHOW ANSWER LINK TO TEXT Your answer is correct. Assume that on January 1, 2015, after paying interest, Ohlman calls bonds having a face value of $698,000. The call price is 103. 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. 1TBonds Payable 698000 Loss on Bond Redemption 20940 Cash 718940

Explanation / Answer

Interest Expenses              24,450    Cash           24,450 (1676000-698000)*5%*6/12

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