Sears. Roebuck & Co. is perhaps best known for its mall-based retail stores that sell apparel, home, and automotive products. The company does more than S41 billion in sales each year.

Assume that as part of its cash management strategy. Sears purchased S10 million bonds at par for cash on July 1, 2004. The bonds pay 10 percent interest each June 30 and December 31 and mature in 10 years. Sears plans to hold the bonds until maturity.

Required: 1. Record the purchase of the bonds on July 1, 2004. 2. Record the receipt of interest on December 31. 2004.