On 1 January 20X2, Investor Company purchased $1,000,000 of Operating Corp. 5% bonds, classified as an AC investment. The bonds pay semi-annual interest each 30 June and 31 December. The market interest rate was 6% on the date of purchase. The bonds mature on 30 December 20X11.

(PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.)

Required:

1. Calculate the price paid by Investor. (Round time value factor to 5 decimal places. Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.) 2. Construct a table that shows interest revenue reported by Investor, and the carrying value of the investment, for the first two interest periods. Use the effective-interest method. (Round your answers to the nearest whole dollar amount.)

3 Prepare the entry for the first interest payment based on your calculations in requirement 2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount.)

Record the Interest revenue.