Exercise $14-30($Algo$)$ Reporting bonds at fair value $[$LO$14-6]$

On January $1,2024,$ Rapid Airlines issued $$285$ million of its $8\%$ bonds for $$262$ million.

The bonds were priced to yield $10\%.$

Interest is payable semiannually on June $30$ and December $31.$

Rapid Airlines records interest at the effective rate and elected the option to report these bonds at their fair value.

On December $31,2024,$ the fair value of the bonds was $$275$ million as determined by their market value in the over$-$the$-$counter market.

Rapid determined that $$1,000,000$ of the increase in fair value was due to a decline in general interest rates.

Required:

$1.$ to $3.$ Prepare the journal entries to record interest on June $30,2024($the first interest payment$),$ on December $31,2024($the second interest payment$)$ and to adjust the bonds to their fair value for presentation in the December $31,2024,$ balance sheet.

Note: Enter your answers in whole dollars. If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.