Question 1

On January 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.

Date	Account Title			Debit			Credit
Starburst Corporation
Balance Sheet (Partial)
December 31, 2015
1/1/15	Cash			Amount
	Bonds Payable						Amount
	Premium on Bonds Payable						Amount
7/1/15	Interest Expense			Amount
	Cash						Amount
	Premium on Bonds Payable			Amount
	Interest Expense						Amount
12/31/15	Interest Expense			Amount
	Interest PAyable						Amount
	Premium on Bonds Payable			Amount
	Interest expense						Amount
Starburst Corporation
Balance Sheet (Partial)
December 31, 2016
Long Term Liabilities
Bonds Payable		Amount
Add: Premium on Bonds Payable		Amount
					Amount
Long Term Liabilities
Bonds Payable			Amount
Add: Premium on Bonds Payable			Amount
						Amount