Question

1.Starting 1/1/14 and continuing each January 1 for four additional years, Case Corporation will deposit $10,000 in an account that will initially earn interest at a rate of 5%, credited each year on December 31. After the last deposit is made on 1/1/18, the account will earn 10% interest. What will be the approximate amount of the investment fund on December 31, 2020?

Select one:

a. $ 66,860

b. $60,782

c. $67,012

d. $70,363

e. $73,546

2.Bill Gates plans to deposit into the bank a single amount on 9/1/15; he desires to withdraw $10,000 on 9/1/22 and $10,000 on 9/1/23. The Interest Rate is 8%. What single amount must be deposited on 9/1/15 to provide for the withdrawals?

Select one:

a. $10,805

b. $11,670

c. $17,833

d. $11,238

e. $13,108

On January 1, 2015, Oxford Company finished consultation services and accepted in exchange a

promissory note with a face value of $600,000 and a due date of December 31, 2017. The stated rate of interest is 6% with interest receivable at the end of each year through 12/31/17. Assume an effective interest rate of 8% is implicit in the agreed-upon price. The effective amortization method is used.

3.Oxford's journal entry on 1/1/15 will record approximately what amount of service revenue?

Select one:

a. $569,074

b. $632,076

c. $600,000

d. $588,889

e. $611,320

Answer 1

Answer to Question 1:

Date Opening Balance Deposit Amount Interest Rate Interest Amount Calculation Closing Balance Calculation 01-01-14 $ - $ $ 10,000 5% $ 500 (10,000 X 5%) $ 10,500 (10,000 + 500) 01-04-15 $ 10,500 $ 10,000 5% $ 1,025 (10,500 + 10,000) X 5%) $ 21,525 (10,500 + 10,000 + 1,025) 01-04-16 $ 21,525 $ 10,000 5% $ 1,576 (21,525 + 10,000) X 5%) $ 33,101 (21,525 + 10,000 + 1,576) 01-04-17 $ 33,101 $ 10,000 5% $ 2,155 (33,101 + 10,000) X 5%) $ 45,256 (33,101 + 10,000+ 2,155) 01-04-18 $ 45,256 $ 10,000 10% $ 5,526 (45,526 + 10,000) X 10%) $ 60,782 (45,256 + 10,000 + 5,526) 01-04-19 $ 60,782 $ 10% $ 6,078 (60,782 X 10%) $ 66,860 (60,782 + 6,078) 01-04-20 $ 66,860 $ 10% $ 6,686 |(66,860 X 10%) 73,546 (66,860 +6,686) Ic The closing balance as on 31st December 2020 is $73,546 Hence, the correct answer is Option E