Electronic Arts Inc. “is a global leader in digital interactive entertainment. We develop, market, publish and deliver games, content and services that can be played and watched on game consoles, PCs, mobile phones and tablets.” Popular brands include Battlefield, The Sims, Madden NFL, and Star Wars. The company reported over $5.5 billion in revenue in a recent year. Assume that, as part of its cash management strategy, Electronic Arts purchased as a long-term investment $12 million in 10-year bonds for $13,785,346 cash on July 1 of the current year. The bonds pay 8 percent interest semiannually on June 30 and December 31. The market rate on the bonds on the date of purchase was 6 percent.

Required:

1. Record the purchase of the bonds on July 1 of the current year.

2. Record the receipt of interest on December 31 of the current year (apply the effective interest amortization method).