On 1 January 20X8, Khalil Ltd. purchased $2,000,000 of six year, Harvest Ltd. 5.4% bonds. The bonds pay semi annual interest each 30 June and 31 December. The market interest rate was 6% on the date of purchase. Khalil is a private company that complies with ASPE and uses straight line amortization.

Required:

1. Calculate the price paid by Khalil Ltd.

2. Construct a table that shows interest revenue reported by Khalil and the carrying value of the investment for four interest periods. Use the straight line method.

3. Give entries for the first four interest periods based on your calculations in requirement 2.