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On 1/1/2015, Starburst Company issued 10-year bonds with a face value of $500,000 at 102. The bonds carry a stated interest rate of 7%, with interest payable semi-annually on January 1 and July 1. Starburst uses the straight-line method of amortizing bond premium or discount.
(a) Prepare the journal entry to record the issuance of the bonds.
(b) Prepare the journal entry to record payment of interest on July 1, 2015.
(c) Prepare the adjusting entry to record the accrual of interest on December 31, 2015.
(d) Prepare the balance sheet presentation for the bond on 12/31/2015.
(e) Prepare the balance sheet presentation for the bond on 12/31/2016.
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The primary disadvantage of accrual accounting is that
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Year Account balance, beginning of year" "Deposit at beginning of year" "Interest earned during year" "Total in account, end year"
A zero coupon bond with a face value of $1,000 is issued with an initial price of $565.01. The bond matures in 20 years. What is the implicit interest, in dollars, for the first year of the bond's life?
Adverse financial situations occurring throughout the 20th century led to government legislative interventions regarding corporate financial accounting on several occasions.
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