Assume the General Fund has two outstanding investments as of its 6/30/X5 year end, as follows:
-$100,000 Certificate of Deposit, 6 month original maturity, 3% annual interest rate, purchased 4/30/X5
-$500,000 Commercial Paper, 8 month original maturity, 3% annual interest rate, purchased 1/31/X5
The interest revenue that would be recorded in the GAAP-based external financial statements for the General Fund as of 6/30/X5 would be

Question

Assume the General Fund has two outstanding investments as of its 6/30/X5 year end, as follows: 
-$100,000 Certificate of Deposit, 6 month original maturity, 3% annual interest rate, purchased 4/30/X5
-$500,000 Commercial Paper, 8 month original maturity, 3% annual interest rate, purchased 1/31/X5
The interest revenue that would be recorded in the GAAP-based external financial statements for the General Fund as of 6/30/X5 would be

Quizplus · Accepted Answer

To calculate the interest revenue for the General Fund, we need to find the interest earned on each investment from the date of purchase to the year-end date of 6/30/X5.

For the Certificate of Deposit: 
- 6/30/X5 minus 4/30/X5 equals 2 months of accrued interest 
- 2/12 of a year times $100,000 times 3% annual interest rate equals $500

For the Commercial Paper: 
- 6/30/X5 minus 1/31/X5 equals 5 months of accrued interest 
- 5/12 of a year times $500,000 times 3% annual interest rate equals $6,250

Therefore, the total interest revenue for the General Fund as of 6/30/X5 would be $500 + $6,250 = $6,750, which is option C.

Assume the General Fund Has Two Outstanding Investments as of Its