California Company invested $120,000 in a certificate of deposit on August 1, 2016. The certificate had a 3 percent annual rate of interest and a one-year term to maturity.
Required
a. What amount of interest revenue will California recognize for the year ending December 31, 2016?
b. Show how the December 31, 2016, adjusting entry to recognize the accrued interest revenue affects the accounting equation.
c. What amount of cash will California collect for interest revenue in 2016?
d. What is the amount of interest receivable as of December 31, 2016?
e. What amount of cash will California collect for interest revenue in 2017, assuming it does not renew the CD?
f. What amount of interest revenue will California recognize in 2017, assuming it does not renew the CD?
g. What is the amount of interest receivable as of December 31, 2017, assuming it does not renew the CD?