At the beginning of 2015,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 2015,and $3,600 from the Series EE bonds in 2024.

Question

Quizplus · Accepted Answer

Mary does not recognize the entire income from the CD in 2015; it is recognized over the 3-year period. The Series EE bond interest is recognized when it matures or is redeemed, not in 2024 unless it is redeemed then.

At the Beginning of 2015,Mary Purchased a 3-Year Certificate of Deposit