Several years ago, Pappy Company acquired 80% of the outstanding shares of Sunny Company, at a cost equal to Sunnys book value at the time. On January 1, 2005, Sunny issued 10-year corporate bonds with a maturity amount of $8,000,000. These bonds have an 8% face interest rate and pay interest annually on January 1. The total amount received by Sunny when the bonds were issued was $8,400,000. On April 1, 2008, Pappy purchased Sunny bonds with a $2,000,000 maturity amount, paying $1,784,000 plus accrued interest. For 2008, Sunny reported Net Income of $400,000 and declared and paid dividends of $200,000. For 2008, Pappy had net earnings from its own operations (not including Income from Sunny) of $800,000 and declared and paid dividends to $350,000. Both Pappy and Sunny use straight-line amortization of bond premium and discount. Pappy records Bond Investments net of discount or premium. Sunny shows a separate Discount or Premium ledger account.