On December 31, Year 7, PCP Ltd. purchased bonds of ACP Ltd. The issue date of the bonds is December 31, Year 7. These are 10-year, 6% coupon bonds with a face value of $1,000,000 paying interest twice a year on June 30 and December 31 at a market rate of The market rate would then be 6.40%. The bonds will be accounted for at cost/amortized cost.

Required:

1. What was the issue price? Please highlight your final figure in yellow.
2. How much bondinterest income(round to the nearest dollar) should PCP report on June 30, Year 8? (Please highlight your final figure in yellow.)
3. How much bondinterest income(round to the nearest dollar) should PCP report on December 31, Year 8? (Please highlight your final figure in yellow.)
4. On December 31, Year 8, (after collecting interest for December) PCP was experiencing some cash flow problems and sold the bonds. The bonds were available in the secondary market at a yield rate of 5.6%.

What would be the amount of the gain or loss? Show calculations for possible part marks. Please highlight your final figure in yellow and clearly indicate if it is a gain or a loss.