On 1 January 20X4, Queen Company purchased $5,000,000 of Sport Corp. 7% bonds, classified as an FVOCI-Bonds investment. The bonds pay semi-annual interest each 30 June and 31 December. The market interest rate was 5% on the date of purchase. The bonds mature on 31 December 20X8.

Required:

1. Calculate the price paid by Queen Company.

2. Construct a table that shows interest revenue reported by Queen, and the carrying value of the investment, for the first two interest periods. Use the effective-interest method.

3. Queen has a June 30 year-end. On June 30, 20X4, the fair value of the investment was $5,240,000. Prepare the journal entries required on June 30 related to this investment.

4. Prepare the journal entry for the second payment of interest received on December 31, 20X4.