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The following transactions relate to bond investments of Livermore Laboratories. The company s fiscal year ends on December 3 1 . Livermore uses the straight
The following transactions relate to bond investments of Livermore Laboratories. The companys fiscal year ends on December Livermore uses the straightline method to determine interest. July Purchased $ million of Bracecourt Corporation debentures, due in years June for $ million. Interest is payable on January and July of each year. October Purchased $ million of Framm Pharmaceuticals debentures, due May for $ plus accrued interest. Interest is payable on June and December of each year. December Received interest on the Framm bonds. December Accrued interest. January Received interest on the Bracecourt bonds. June Received interest on the Framm bonds. July Received interest on the Bracecourt bonds. September Sold $ million of the Framm bonds at plus accrued interest. December Received interest on the remaining Framm bonds. December Accrued interest. January Received interest on the Bracecourt bonds. February Sold the remainder of the Framm bonds at plus accrued interest. December Accrued interest. Required: Prepare the appropriate journal entries for these longterm bond investments. By how much will Livermore Labs earnings increase in each of the three years as a result of these investments? Ignore income taxes.
The following transactions relate to bond investments of Livermore Laboratories. The companys fiscal year ends on December Livermore uses the straightline method to determine interest.
July Purchased $ million of Bracecourt Corporation debentures, due in years June for $ million. Interest is payable on January and July of each year.
October Purchased $ million of Framm Pharmaceuticals debentures, due May for $ plus accrued interest. Interest is payable on June and December of each year.
December Received interest on the Framm bonds.
December Accrued interest.
January Received interest on the Bracecourt bonds.
June Received interest on the Framm bonds.
July Received interest on the Bracecourt bonds.
September Sold $ million of the Framm bonds at plus accrued interest.
December Received interest on the remaining Framm bonds.
December Accrued interest.
January Received interest on the Bracecourt bonds.
February Sold the remainder of the Framm bonds at plus accrued interest.
December Accrued interest.
Required:
Prepare the appropriate journal entries for these longterm bond investments.
By how much will Livermore Labs earnings increase in each of the three years as a result of these investments? Ignore income taxes.
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