leach company invested $80,000 in a certificate of deposit onjune 1, 2008. the c
ID: 2433360 • Letter: L
Question
leach company invested $80,000 in a certificate of deposit onjune 1, 2008. the certificate had a 6% annual interest rate and aone year term to maturity. a) what amount of interest revenue will leach recognize forthe year ending december 31, 2008? b) show how the december 31,2008, adjusting entry to recognizethe accrued interest revenue affects the accounting equation. c) what amount of cash will leach collect for interest revenuein 2008? d) what is the amount of interest receivable as of december31,2008? e) what amount of cash will leach collect for interest revenuein 2009, assuming it does not renew the CD? f) what amount of interest revenue will reach recognize in2009, assuming it does not renew the CD? g) wha is the amount of interest receivable as of december31,2009, assuming it does not renew the CD? leach company invested $80,000 in a certificate of deposit onjune 1, 2008. the certificate had a 6% annual interest rate and aone year term to maturity. a) what amount of interest revenue will leach recognize forthe year ending december 31, 2008? b) show how the december 31,2008, adjusting entry to recognizethe accrued interest revenue affects the accounting equation. c) what amount of cash will leach collect for interest revenuein 2008? d) what is the amount of interest receivable as of december31,2008? e) what amount of cash will leach collect for interest revenuein 2009, assuming it does not renew the CD? f) what amount of interest revenue will reach recognize in2009, assuming it does not renew the CD? g) wha is the amount of interest receivable as of december31,2009, assuming it does not renew the CD?Explanation / Answer
a) what amount of interest revenue will leach recognize forthe year ending december 31, 2008? No. of months from June 1 to December 31 =7 months RecognizableInterest Revenue for the year ending December 31, 2008 = $80,000 x6% x 7 / 12 = $2,800 b) show how thedecember 31,2008, adjusting entry to recognize the accrued interestrevenue affects the accounting equation. InterestRecievables $2,800 Interest(Income) $2,800 InterestReceivables will appear on Assets side (Debit) and Interest Incomewill increase the profit and would appearon Liabilities side (Credit) as Retained Earnings or NetProfit. c) what amount of cashwill leach collect for interest revenue in2008? Noamount of CASH would be collected as Interest revenue for the year2008 since the certificate would be paid on maturitywith interest. d) what is the amountof interest receivable as of december 31,2008? Interestreceivables for2008 $2,800 Interestreceivables for2008 $2,800 e) what amount of cashwill leach collect for interest revenue in 2009, assuming it doesnot renew the CD? Baseprincipal for interest as on Jan 1,2009 = $80,000 + $2,800 =$82,800 Interestfor the period from Jan 1 to May 31,2009 (5months) = $82,800 x 6% x 5 / 12 =$2,070 f) what amount ofinterest revenue will reach recognize in 2009, assuming it does notrenew the CD? Interest for the periodfrom Jan 1 to May 31,2009 (5months) = $82,800 x 6% x 5 / 12 =$2,070 g) what is the amountof interest receivable as of december 31,2009, assuming it does notrenew the CD? Since itdoesn't renew the CD, the whole proceeds would be received on June1,2009. Therewould be no balance in Interest Receivables account.Interest for the periodfrom Jan 1 to May 31,2009 (5months) = $82,800 x 6% x 5 / 12 =$2,070 g) what is the amountof interest receivable as of december 31,2009, assuming it does notrenew the CD? Since itdoesn't renew the CD, the whole proceeds would be received on June1,2009. Therewould be no balance in Interest Receivables account.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.