Explanation:
The journal entries are shown below:
1. Building A/c Dr $176
Equipment A/c Dr $270
To Cash A/c $408
To Note payable A/c $38
(Being the building and the equipment is purchased for cash and note payable)
2. Cash A/c Dr $345
To Common stock $240 (120 shares × $2)
To Additional paid in capital A/c - Common stock A/c $105
(Being the common stock is issued for cash)
3. Retained earnings A/c Dr $145
To Dividend payable A/c $145
(Being the dividend is declared)
4. Short - term investment A/c Dr $7,616
To Cash A/c $7,616
(Being the short term investment is purchased for cash)
5. No journal entry is required
6. Cash A/c Dr $4,413
To Short - term investment A/c $4,413
(Being the short-term investment is purchased)
Using the formula for compound interest:
The formula for annual compound interest, including principal sum, is:
A = P (1 + r/n)ⁿˣ
Where:
A = the future value = $95000
P = the principal investment amount = ?
r = the annual interest rate = 0.06
n = the number of times that interest is compounded per year = 2
x = the number of years the money is invested = 0.5
95,000 = P (1 + 0.06/2)¹
95,000 = P (1.06/2)
95,000 = P (0.53)
P = 95,000 ÷ 0.53
P = 95,000 ÷ 0.53
P = 179,245.30
Total compounded interest = 179,245.30 - 95,000
Total compounded interest = 84,245
