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  3. on 1 july 20x8, sun company purchased $4,000,000 o

On 1 July 20X8, Sun Company purchased $4,000,000 of Moon Corp. 6.2% bonds, classified as...

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Accounting

On 1 July 20X8, Sun Company purchased $4,000,000 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 20X13.
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 20X9?
5. What would the balance of the investment account for the year ended 31 December 20X9?1
0.970874
2
0.942596
3
0.915142
4
0.888487
5
0.862609
6
0.837484
7
0.813092
8
0.789409
9
0.766417
10
0.744094
11
0.722421
12
0.70138
13
0.680951
14
0.661118
15
0.641862
16
0.623167
17
0.605016
18
0.587395
19
0.570286
20
0.553676

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