Recording Growth in a Savings Account with Equal Periodic Payments (Supplement C)
On each December 31. you plan to deposit $2,000 in a savings account. The account will earn 9 percent annual interest, which will be added to the fund balance at year-end. The first deposit will be made December 31, 2011 (end of period).
Required (show computations and round to the nearest dollar):
1. Give the required journal entry on December 31, 2011.
2. What will be the balance in the savings account at the end of the 10th year (i.e.. after 10 deposits)?
3. What is the interest earned on the 10 deposits?
4. How much interest revenue did the fund earn in 2012? 2013?
5. Give all required journal entries at the end of 2012 and 2013.
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