By how much will liver more labs earnings increase in each


The following transactions relate to bond investments of Liver more Laboratories. The company's fiscal year ends on December 31. Liver more uses the straight-line method to determine interest.

2011

July 1 Purchased $16 million of Bracecourt Corporation 10% debentures, due in 20 years (June 30, 2031), 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, 2021, 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.

2012

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.

2013

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 Liver more Labs' earnings increase in each of the three years as a result of these investments? (Ignore income taxes.) 

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Accounting Basics: By how much will liver more labs earnings increase in each
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