Use the Simple Interest Formula

question 85

Multiple Choice

Use the simple interest formula.
-How can $56,000 be invested, part at 4% annual simple interest and the remainder at 10% annual simple interest, so that the interest earned by the two accounts is equal at the end of the year?

• A) $16,000 invested at 4%; $40,000 invested at 10%
• B) $26,000 invested at 4%; $30,000 invested at 10%
• C) $40,000 invested at 4%; $16,000 invested at 10%
• D) $30,000 invested at 4%; $26,000 invested at 10%

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Definitions:

Reversing Entries

Optional accounting procedures that are used to cancel out adjusting entries of the previous accounting period in the new period.

Interest Expense

The cost incurred by an entity for borrowing funds, often reported on the income statement.

Closing Journal Entries

At the close of an accounting cycle, transactions are documented to move balances from provisional to fixed accounts.

Ticket Revenue

The income generated from the sale of tickets for events like concerts, movies, or transportation services.