At the end of each year, you plan to deposit $2,900 in a savings account. The ac
ID: 2557091 • Letter: A
Question
At the end of each year, you plan to deposit $2,900 in a savings account. The account will eam 9% annual interest, which will be added to the fund balance at year-end. The first deposit will be made at the end of Year 1. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) Required 1. Prepare the required joumal entry at the end of Year 1. (If no entry is required for a transactionlevent, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the required journal entry on December 31, Year 1 Note: Enter debits before credits. Date General Journal Debit Credit 31 Record entry Clear entry View general journal 2, what will be the balance in the savings account at the end of the 10th year (i.e., after 10 deposits)? (Round your answer to nearest whole dollar.) Balance in the savings accountExplanation / Answer
Ans. 1. Journal Entry at the 1yr end
31.dec Bank A/c Dr $2900
To Cash A/c $2900
(being amt deposited in saving a/c)
2. Caculation of Balance in saving a/c at the end of 10th year
amt is deposited is end of each yr means upto 10yr only 9yr interest is componded.
Balance of saving ac at the at the end of 10yr = P {(1+r)n-1 }
r
= 2900 {(1+.09)9 -1} / .09
= $37761
Balance at the end of 10yr is = $37761+2900 =$40661
3. Calculation of Interest earning at the end of 10th year
Total Balance in Saving A/c = 40661
Less: Principal (10X2900) = 29000
Interest earned = $11661
4. Calculation of Interest Revenue of 2yrs = 2900X9% = $261
Calculation of Interest revenue at the 3rd yr end =
for amt deposited in 1yr end = 2900X.09 = $261
For amt deposited in 2nd yr end = 2900X.09 =$261
For amt Intt. earned in 1yr deposite = 261X.09 =$23.49
Total Interest Earned in 3rd yr = 545.49
Interest revenue in 2nd yr = $269
Interest revenue in 3rd yr = $545.49
5. Journal Entry in the year of 2nd
Accured Interest A/c Dr. 269
To Profit and Loss 269
(Being Interest Revenue Recognized)
Journal entry at the 3rd year end
Accured Interest on Saving A/c 545.49
To Profit and Loss A/c 545.49
(Interest Revenue Recognized for 3rd yr)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.