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. 

2021 

July 1 Purchased $16 million of Bracecourt Corporation 10% debentures, due in 20 years (June 30, 2041), for $15.7 million. Interest is payable on January 1 and July 1 of each year. 

Oct. 1 Purchased $30 million of 12% Framm Pharmaceuticals debentures, due May 31, 2031, for $31,160,000 plus accrued interest. Interest is payable on June 1 and December 1 of each year 

Dec. 1 Received interest on the Framm bonds. 

31 Accrued interest. 

2022 

Jan. 1 Received interest on the Bracecourt bonds. 

June 1 Received interest on the Framm bonds. 

July 1 Received interest on the Bracecourt bonds 

Sept. 1 Sold $15 million of the Framm bonds at 101 plus accrued interest. 

Dec. 1 Received interest on the remaining Framm bonds. 

31 Accrued interest. 

2023 

Jan. 1 Received interest on the Bracecourt bonds. 

Feb. 28 Sold the remainder of the Framm bonds at 102 plus accrued interest. 

Dec. 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.)