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The following section is taken from Brown Corp’s statement of financial position at December 31, 2010

Accounting

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The following section is taken from Brown Corp’s statement of financial position at December 31, 2010.

                        Current liabilities

                           Bond interest Payable................................................... $    90,000

                        Non-current liabilities

                           Bonds Payable, 9%, due January 1, 2015 ..................  2,000,000

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, 2011.

2. Assume that on January 1, 2011, after paying interest, Brown calls bonds having a face value of $800,000. The call price is 104. Record the redemption of the bonds.
3. Prepare the entry to record the payment of interest on July 1, 2011, assuming no previous accrual of interest on the remaining bonds.