The following transactions relate to bond investments of Livermore Laboratories. The company's fiscal year ends on...

Transcribed Image Text:

The following transactions relate to bond investments of Livermore Laboratories. The company's fiscal year ends on December 31. Livermore uses the straight-line method to determine interest. 2024 July 1 Purchased $23 million of Bracecourt Corporation 12% debentures, due in 20 years (June 30, 2044), for $22.7 million. Interest is payable on January 1 and July 1 of each year. October 1 Purchased $37 million of 15% Framm Pharmaceuticals debentures, due May 31, 2034, for $38,972,000 plus accrued interest. Interest is payable on June 1 and December 1 of each year. December 1 Received interest on the Framm bonds. December 31 Accrued interest. 2025 January 1 Received interest on the Bracecourt bonds. June 1 Received interest on the Framm bonds. July 1 Received interest on the Bracecourt bonds. September 1 Sold $18.5 million of the Framm bonds at 103 plus accrued interest. December 1 Received interest on the remaining Framm bonds. December 31 Accrued interest. 2026 January 1 Received interest on the Bracecourt bonds. February 28 Sold the remainder of the Framm bonds at 104 plus accrued interest. December 31 Accrued interest. Required: 1. Prepare the appropriate journal entries for these long-term bond investments. 2. By how much will Livermore Labs' earnings increase in each of the three years as a result of these investments? (Ignore income taxes.) Complete this question by entering your answers in the tabs below. The following transactions relate to bond investments of Livermore Laboratories. The company's fiscal year ends on December 31. Livermore uses the straight-line method to determine interest. 2024 July 1 Purchased $23 million of Bracecourt Corporation 12% debentures, due in 20 years (June 30, 2044), for $22.7 million. Interest is payable on January 1 and July 1 of each year. October 1 Purchased $37 million of 15% Framm Pharmaceuticals debentures, due May 31, 2034, for $38,972,000 plus accrued interest. Interest is payable on June 1 and December 1 of each year. December 1 Received interest on the Framm bonds. December 31 Accrued interest. 2025 January 1 Received interest on the Bracecourt bonds. June 1 Received interest on the Framm bonds. July 1 Received interest on the Bracecourt bonds. September 1 Sold $18.5 million of the Framm bonds at 103 plus accrued interest. December 1 Received interest on the remaining Framm bonds. December 31 Accrued interest. 2026 January 1 Received interest on the Bracecourt bonds. February 28 Sold the remainder of the Framm bonds at 104 plus accrued interest. December 31 Accrued interest. Required: 1. Prepare the appropriate journal entries for these long-term bond investments. 2. By how much will Livermore Labs' earnings increase in each of the three years as a result of these investments? (Ignore income taxes.) Complete this question by entering your answers in the tabs below.