Federal Semiconductors issued 10% bonds, dated January 1, with a face amount of $770 million on January 1, 2021. The bonds sold for $708,222,420 and mature on December 31, 2040 (20 years). For bonds of similar risk and maturity the market yield was 11%. Interest is pald semiannually on June 30 and December 31. Federal determines interest at the effective rate. Federal elected the option to report these bonds at their fair value. On December 31, 2021, the fair value of the bonds was $690 million as determined by their market value in the over-the-counter market. Assume the fair value of the bonds on December 31, 2022 had risen to $696 million. Required: Complete the below table to record the following journal entries. 1. & 2. Prepare the journal entries to adjust the bonds to their fair value for presentation in the December 31, 2021, balance sheet, and adjust the bonds to their fair value for presentation in the December 31, 2022, balance sheet. Federal determined that none of the change in fair value in 2021 was due to a decline in general Interest rates and one-half of the increase in fair value in 2022 was due to a decline in general interest rates. Calculation General Journal Complete the below table to determine the amounts for the journal entries. (Negative amount should be indicated by a minus sign. Round final answers to the nearest whole dollars.) Cash Interest Bond Interest Paid Expense Increase in Balance Semiannual Interest Period-End 01/01/2021 06/30/2021 12/31/2021 06/30/2022 12/31/2022 $ $ 38,500,000 $ 38,952.233 38,500,000 38,977,106 38,500,000 39,003,347 38,500,000 39,031,031 452,233 477,106 503,347 531,031 Unrealized Carrying Value Fair Value Holding Gain (loss) $ 708,222,420 708,674,653 709,151,759 $690,000,000 $ 19,151,759 709,655, 106 710,186,137 S 696,000,000 Fair Value Adjustment Net Liability(FMV) 01/01/2021 06/30/2021 12/31/2021 Bonds Payable 708,222.420 01/01/2021 452,233 06/30/2021 477,106 12/31/2021 709,151,759 503,347 06/30/2022 531,031 12/31/2022 710,186,137 $ 19,151,759 19.151,759 $ 690,000,000 06/30/2022 12/31/2022 (19,151,759) Prepare the journal entries to adjust the bonds to their fair value for presentation in the December 31, 2021, balance sheet, and adjust the bonds to their fair value for presentation in the December 31, 2022, balance sheet. Federal determined that none of the change in fair value in 2021 was due to a decline in general interest rates and one-half of the increase in fair value in 2022 was due to a decline in general interest rates. (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.) Show less View transaction list Journal entry worksheet 3 4 56 Record the interest expense. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2022 Record entry Clear entry View general Journal Prev 6 of 9 Next View transaction list Journal entry worksheet Federal Semiconductors issued 10% bonds, dated January 1, with a face amount of $770 million on January 1, 2021. The bonds sold for $708,222,420 and mature on December 31, 2040 (20 years). For bonds of similar risk and maturity the market yield was 11%. Interest is pald semiannually on June 30 and December 31. Federal determines interest at the effective rate. Federal elected the option to report these bonds at their fair value. On December 31, 2021, the fair value of the bonds was $690 million as determined by their market value in the over-the-counter market. Assume the fair value of the bonds on December 31, 2022 had risen to $696 million. Required: Complete the below table to record the following journal entries. 1. & 2. Prepare the journal entries to adjust the bonds to their fair value for presentation in the December 31, 2021, balance sheet, and adjust the bonds to their fair value for presentation in the December 31, 2022, balance sheet. Federal determined that none of the change in fair value in 2021 was due to a decline in general Interest rates and one-half of the increase in fair value in 2022 was due to a decline in general interest rates. Calculation General Journal Complete the below table to determine the amounts for the journal entries. (Negative amount should be indicated by a minus sign. Round final answers to the nearest whole dollars.) Cash Interest Bond Interest Paid Expense Increase in Balance Semiannual Interest Period-End 01/01/2021 06/30/2021 12/31/2021 06/30/2022 12/31/2022 $ $ 38,500,000 $ 38,952.233 38,500,000 38,977,106 38,500,000 39,003,347 38,500,000 39,031,031 452,233 477,106 503,347 531,031 Unrealized Carrying Value Fair Value Holding Gain (loss) $ 708,222,420 708,674,653 709,151,759 $690,000,000 $ 19,151,759 709,655, 106 710,186,137 S 696,000,000 Fair Value Adjustment Net Liability(FMV) 01/01/2021 06/30/2021 12/31/2021 Bonds Payable 708,222.420 01/01/2021 452,233 06/30/2021 477,106 12/31/2021 709,151,759 503,347 06/30/2022 531,031 12/31/2022 710,186,137 $ 19,151,759 19.151,759 $ 690,000,000 06/30/2022 12/31/2022 (19,151,759) Prepare the journal entries to adjust the bonds to their fair value for presentation in the December 31, 2021, balance sheet, and adjust the bonds to their fair value for presentation in the December 31, 2022, balance sheet. Federal determined that none of the change in fair value in 2021 was due to a decline in general interest rates and one-half of the increase in fair value in 2022 was due to a decline in general interest rates. (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.) Show less View transaction list Journal entry worksheet 3 4 56 Record the interest expense. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2022 Record entry Clear entry View general Journal Prev 6 of 9 Next View transaction list Journal entry worksheet
