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On 1 July 20X8, Sun Company purchased $5,000,000 of Moon Corp. 6.2% bonds, classified as an AC investment. The bonds pay semi-annual interest each 30
On 1 July 20X8, Sun Company purchased $5,000,000 of Moon Corp. 6.2% 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 20X3. (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 Sun Company. (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 Sun, and the carrying value of the investment, for each interest period for four interest periods. Use the effective-interest method. (Round your answers to the nearest whole dollar amount.) 3. . Prepare the entries for the first two interest periods 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.) 4-a. How much interest revenue would be reported for the year ended 31 December 20X9? (Round your answer to the nearest whole dollar amount.) 4-b. What would the balance of the investment account for the year ended 31 December 20X9? (Round your answer to the nearest whole dollar amount.)
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