Mile Down & Co. owns vast amounts of corporate bonds. Suppose Mile Down buys $ 900,000 of CocoCorp bonds at face value on January 2, 2014. The CocoCorp bonds pay interest at the annual rate of 5% on June 30 and December 31 and mature on December 31, 2018. Mile Down intends to hold the investment until maturity.
1. Journalize any required 2014 entries for the bond investment.
2. How much cash interest will Mile Down receive each year from CocoCorp?
3. How much interest revenue will Mile Down report during 2014 on this bond investment?