Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 16

Computing Deposit Required and Accounting for a Single-Sum Savings Account
On January 1, 2013, Alan King decided to transfer an amount from his checking account into a savings account that later will provide $80,000 to send his son to college (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 to the nearest dollar):
1. How much must Alan deposit on January 1, 2013
2. Give the journal entry that Alan should make on January 1, 2013, to record the transfer.
3. What is the interest for the four years
4. Give the journal entry that Alan should make on ( a ) December 31, 2013, and ( b ) December 31, 2014.