# Under the original issue discount oid rules as

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Chapter 2 / Exercise 17
College Algebra with Applications for Business and Life Sciences
Larson
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59. Under the original issue discount (OID) rules as applied to a three-year certificate of deposit: a. All of the income must be recognized in the year of maturity by a cash basis taxpayer. b. The OID will be included in gross income for the year of purchase. c. The interest income will be the same each year. d. The interest income will be greater in the third year than in the first year. e. None of these is correct. d
60. Freddy purchased a certificate of deposit for \$20,000 on July 1, 2014. The certificate's maturity value in two years (June 30, 2016) is \$21,218, yielding 3% before-tax interest.
61. Jerry purchased a U.S. Series EE savings bond for \$744. The bond has a maturity value in 10 years of \$1,000 and yields 3% interest. This is the first Series EE bond that Jerry has ever owned.
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Chapter 2 / Exercise 17
College Algebra with Applications for Business and Life Sciences
Larson
Expert Verified
a 62. Office Palace, Inc., leased an all-in-one printer to a new customer, Ashley, on December 27, 2014. The printer was to rent for \$600 per month for a period of 36 months beginning January 1, 2015. Ashley was required to pay the first and last month's rent at the time the lease was signed. Ashley was also required to pay a \$1,500 damage deposit. Office Palace must recognize as income for the lease:
63. The Maroon & Orange Gym, Inc., uses the accrual method of accounting. The corporation sells memberships that entitle the member to use the facilities at any time. A one-year membership costs \$480 (\$480/12 = \$40 per month); a two-year membership costs \$720 (\$720/24 = \$30 per month). Cash payment is required at the beginning of the membership period. On July 1, 2014, the company sold a one-year membership and a two-year membership. The company should report as gross income from the two contracts: a. \$1,200 in 2014. b. \$960 in 2014. c. \$180 in 2016. d. \$780 in 2015. e. None of these. d