At the beginning of 2019, Mary purchased a 3-year certificate of deposit (CD) for $8,760.The maturity value of the certificate was $10,000 and it was to yield 4.5%.She also purchased a Series EE bond for $6,400 with a maturity value in 10 years of $10,000.Mary must recognize $1,240 of income from the certificate of deposit in 2019, and
$3,600 from the Series EE bonds in 2028.

Question

Quizplus · Accepted Answer

Interest on a certificate of deposit (CD) is typically recognized annually as it accrues, not in a lump sum at maturity. For the Series EE bond, the interest is often deferred until redemption, sale, or maturity, but the specific recognition of $3,600 in 2028 cannot be determined without knowing the bond's interest rate or how it compounds.

At the Beginning of 2019, Mary Purchased a 3-Year Certificate