On $1$ July $20$X$8,$ Sun Company purchased $$4,000,000$ of Moon Corp. $6\mathrm{.}2\%$ 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 $30$ June $20$X$13.$

Required:

$1.$ Calculate the price paid by Sun Company.

$2.$ Construct a table that shows interest revenue reported by Sun, and the carrying value of the investment, for each interest period for four interest periods. Use the effective$-$interest method.

Period Cash Payment Interest Revenue Amortization Bond Carrying Value

$1$

$2$

$3$

$....$

$3.$ Prepare the entries for the first two interest periods based on your calculations in requirement $2.$

$4.$ How much interest revenue would be reported for the year ended $31$ December $20$X$9?$

$5.$ What would the balance of the investment account for the year ended $31$ December $20$X$9?1$

$0\mathrm{.}970874$

$2$

$0\mathrm{.}942596$

$3$

$0\mathrm{.}915142$

$4$

$0\mathrm{.}888487$

$5$

$0\mathrm{.}862609$

$6$

$0\mathrm{.}837484$

$7$

$0\mathrm{.}813092$

$8$

$0\mathrm{.}789409$

$9$

$0\mathrm{.}766417$

$10$

$0\mathrm{.}744094$

$11$

$0\mathrm{.}722421$

$12$

$0\mathrm{.}70138$

$13$

$0\mathrm{.}680951$

$14$

$0\mathrm{.}661118$

$15$

$0\mathrm{.}641862$

$16$

$0\mathrm{.}623167$

$17$

$0\mathrm{.}605016$

$18$

$0\mathrm{.}587395$

$19$

$0\mathrm{.}570286$

$20$

$0\mathrm{.}553676$