On January 1, 2021, LLB Industries borrowed $280,000 from Trust Bank by issuing a two-year, 10% note, with interest payablequarterly• LLB entered into a two-year interest rate swap agreement on January 1, 2024, and designated the swap as a fair value hedge. Itsintent was to hedge the risk that general interest rates will decline, causing the fair value of its debt to increase• The agreement called for the company to receive payment based on a 10% fixed interest rate on a notional amount of $280,000and to pay interest based on a floating interest rate. The contract called for cash settlement of the net interest amount quarterlyand rates reset at the beginning of each period.• Floating (SOFR) settlement rates were 10 % at January 1, 8% at March 31, and 6% at June 30 and September 30, 2024. The fairvalues of the swap are quotes obtained from a derivatives dealer. Assume that LLB does not elect to use the shortcut method.The swap is deemed highly effective, but it is not assumed to be perfectly effective. Those quotes and the fair values of the noteare as follows:Fair value of interest rate swapFair value of note payableJanuary 1150$ 280,000March 31$ 7,272$ 287,272June 30$13,128$ 236,000September 30$ 11,165$ 291,165Required:Prepare the journal entries through September 30, 2024, to record the issuance of the note, interest, and necessary adjustments forchanges in fair value. Use the extended method.Note: Round your intermediate and final answers to the nearest whole dollar. If no entry is required for a transaction/event, select"No journal entry required" in the first account field.

Notes Payable : Notes payable refers to a loan from a bank or any other financial institution…

Prepare the journal entries through September 30, 2024, to record the issuance of the note, interest, and necessary adjustments for changes in fair value. Use the extended method. Note: Round your intermediate and final answers to the nearest whole dollar if no entry is required for a transaction/event, select

Prepare the journal entries through September 30, 2024, to record the issuance of the note, interest, and necessary adjustments for changes in fair value. Use the extended method. Note: Round your intermediate and final answers to the nearest whole dollar if no entry is required for a transaction/event, select

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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