Question 4: 12 marks

Your client (an individual) has provided you with the following information.

Required: Calculate the total interest income and total interest expenses for 2020.

Interest earned on an investment: $1,000

Interest on short-term investments:

$30,000 term deposit taken out October 31, 2020 (interest at maturity in six months)

Accrued interest from November 1 - December 31, 2020: $100

$200,000 GIC purchased September 1, 2019 (interest payable at maturity on August 31, 2022)

Accrued interest from September 1, 2019 to August 31, 2020: $18,000

Accrued interest from January 1, 2020 to December 31, 2020: $18,444

Government of Canada Treasury Bills purchased for: $18,221 on January 3, 2020

Amount received on maturity on December 31, 2020: $20,000

Interest expenses paid during 2020:

Interest on bank line of credit used for investing in shares described above $44,221

Interest on loan to acquire an automobile: $1,500