P10-3B The following section is taken from Lois Corp."s balance sheet at December 31, 2011.
Current liabilities Interest payable $ 84,000 Long-term liabilities Bonds payable (7%, due January 1, 2016) 1,200,000 Interest is payable annually on January 1. The bonds are callable on any annual interest date .
(a) Journalize the payment of the bond interest on January 1, 2012.
(b) Assume that on January 1, 2012, after paying interest, Lois Corp. calls bonds having a face value of $300,000. The call price is 104. Record the redemption of the bonds.
(c) Prepare the adjusting entry on December 31, 2012, to accrue the interest on the remaining bonds.