On December 31. 2003, Post Company deposited in a fund the cash to pay the principal amount of a

$140,000 debt due on December 31, 2006. The company will make four equal annual deposits on each December 31 in 2003, 2004, 2005, and 2006. The fund will earn 7 percent annual interest, which will be added to the balance at each year-end. The fund trustee will pay the loan principal (to the creditor)

upon receipt of the last fund deposit. The company's accounting period ends December 31.

Required (show computations and round to the nearest dollar): 1. How much must be deposited each December 31? 2. What amount of interest will be earned? 3. How much interest revenue will the fund earn in 2003, 2004. 2005. and 2006? 4. Give journal entries for the company on the following dates:

a. For the first deposit on December 31. 2003.

b. For all amounts at the end of 2004 and 2005.

c. For payment of the debt on December 3 1 , 2006. 5. Show how the effect of the fund will be reported on the December 3 1 . 2004. income statement and balance sheet.