Reference no: EM13915137
On December 28, 2011, Mary Lee went to her accountants, Gorskikov LLP, to get assistance in planning for her child's college education. Ms. Lee had the following alternatives for setting aside cash for a college fund, which must be available on December 31, 2021 :
a. Effective January 2, 2012, Ms. Lee could deposit a single amount of $215,000 in an investment that would guarantee a 6% return until the funds were withdrawn on December 3 1, 2021.
b. Effective December 31, 2012, Ms. Lee could deposit $240,000, at an expected rate of return of 5%, guaranteed until the funds were withdrawn on December 3 1, 2021.
c. Effective January 2, 2012, Ms. Lee could deposit $29,600 a year in an investment that would provide a return of 4.5% annually, until the funds were withdrawn on December 3 1, 2021.
Prepare the schedule that Gorskikov LLP would prepare for Ms. Lee at December 31, 2011, setting forth the amounts that would be available for the college fund under each of the above alternatives. Brief explanation and calculations.
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Brief explanation and calculations
: Prepare the schedule that Gorskikov LLP would prepare for Ms. Lee at December 31, 2011, setting forth the amounts that would be available for the college fund under each of the above alternatives. Brief explanation and calculations.
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