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HW On Sinking Fund C Solutions and Answers

The document contains examples of sinking fund calculations for accumulating funds to pay off a future liability. Problem 1 shows journal entries for a sinking fund transaction. Problem 2 provides the balance sheet of a sinking fund over a year. Problem 3 gives four examples of calculating the annual or one-time contribution needed to accumulate $8 million in a sinking fund over 5 years using different methods. Problem 4 outlines the semiannual contribution and interest payments needed to accumulate $5 million in a sinking fund over 33 years.

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Amjad Rian Mangondato
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152 views5 pages

HW On Sinking Fund C Solutions and Answers

The document contains examples of sinking fund calculations for accumulating funds to pay off a future liability. Problem 1 shows journal entries for a sinking fund transaction. Problem 2 provides the balance sheet of a sinking fund over a year. Problem 3 gives four examples of calculating the annual or one-time contribution needed to accumulate $8 million in a sinking fund over 5 years using different methods. Problem 4 outlines the semiannual contribution and interest payments needed to accumulate $5 million in a sinking fund over 33 years.

Uploaded by

Amjad Rian Mangondato
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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HOMEWORK

SINKING FUND

Problem 1
1 Sinking fund - cash 15,000,000
Cash 15,000,000
2 Sinking fund - securities 3,000,000
Sinking fund - cash 3,000,000
3 Sinking fund - securities 6,000,000
Sinking fund - cash 6,000,000
4 Sinking fund - cash 180,000
Sinking fund - income 180,000
5 Sinking fund - expense 200,000
Sinking fund - cash 200,000
6 Sinking fund - securities 4,000,000
Interest receivable 200,000
Sinking fund - cash 4,200,000
7 Sinking fund - cash 500,000
Sinking fund - income 500,000
Cash 4,000,000
Sinking fund - securities 3,000,000
Gain on sale 1,000,000
8 Sinking fund - cash 400,000
Interest receivable 200,000
Sinking fund - income 200,000
9 Sinking fund - cash 3,960,000
Loss on sale 40,000
Sinking fund - securities 4,000,000
10 RE - unappropriated 16,640,000
RE - appropriated 16,640,000

1
Problem 2
Balance, January 1 4,000,000
Additional investment 800,000
Dividends on investment 50,000
Interest revenue 60,000
Administration cost (20,000)
Balance, December 31 4,890,000

2
Problem 3
1 Amount to accumulate 8,000,000
FVOA factor 5.86660
Annual contribution 1,363,652

Date Interest Contribution Balance


12/31/2023 1,363,652 1,363,652
12/31/2024 109,092 1,363,652 2,836,396
12/31/2025 226,912 1,363,652 4,426,959
12/31/2026 354,157 1,363,652 6,144,768
12/31/2027 491,581 1,363,652 8,000,001

2 Annual contribution 1,262,640.40

Date Interest Contribution Balance


01/01/2023 1,262,640.40 1,262,640
12/31/2023 101,011 1,363,652
01/01/2024 1,262,640.40 2,626,292
12/31/2024 210,103 2,836,395
01/01/2025 1,262,640.40 4,099,036
12/31/2025 327,923 4,426,959
01/01/2026 1,262,640.40 5,689,599
12/31/2026 455,168 6,144,767
01/01/2027 1,262,640.40 7,407,407
12/31/2027 592,593 8,000,000

3 Amount to accumulate 8,000,000


FV of 1 factor 1.36049
One-time contribution 5,880,234

Date Interest Balance


12/31/2023 5,880,239
12/31/2024 470,419 6,350,658
12/31/2025 508,053 6,858,711
12/31/2026 548,697 7,407,407
12/31/2027 592,593 8,000,000

4 Amount to accumulate 8,000,000

3
FV of 1 factor 1.46933000
One-time contribution 5,444,658

Date Interest Balance


01/01/2023 5,444,666
01/01/2024 435,573 5,880,239
01/01/2025 470,419 6,350,658
01/01/2026 508,053 6,858,711
01/01/2027 548,697 7,407,407
01/01/2028 592,593 8,000,000

4
Problem 4
Amount to accumulate 5,000,000
FVOA factor 33.06595
Semiannual contribution 151,213
Semiannual interest 200,000
Total semiannual payment 351,213

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