On January 1, 2017, Alan King decided to transfer an amount from his chequing account into a savings account that later will provide $80,000 to send his son to university (four years from now). The savings account will earn 8 percent, which will be added to the fund each year-end.

Required:

(Show computations and round your answers to the nearest dollar.)

1. How much must Alan deposit on January 1, 2017?

2. Give the January 1, 2017 journal entry that Alan should make to record the transfer.

3. What will the interest be for the four years?

4. Give the journal entry that Alan should make on (a) December 31, 2017, and (b) December 31, 2018.