Federal Semiconductors issued 11% bonds, dated January 1, with a face amount of $800 million on January 1, 2021. The bonds sold for $739,814,813 and mature on December 31, 2040 (20 years). For bonds of similar risk and maturity the market yield was 12%. Interest is paid 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 $730 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 $736 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. Complete this question by entering your answers in the tabs below. 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 Paid Bond Interest Expense Increase in Balance Semiannual Interest Period-End 01/01/2021 06/30/2021 12/31/2021 06/30/2022 12/31/2022 388,889 412,222 $ 44,000,000 $ 44,000,000 44,000,000 44,000,000 44,388,889 $ 44,412,222 44,436,955 44,463,173 Unrealized Carrying Value Fair Value Holding Gain (loss) $ 739,814,813 740,203,702 740,615,924 $ 730,000,000 10,615,924 741,052,879 741,516,052 $ 736,000,000 $ (5,099,872) 436,955 463,173 Fair Value Adjustment Net Liability(FMV) 01/01/2021 06/30/2021 12/31/2021 $ Bonds Payable 739,814,813 01/01/2021 388,889 06/30/2021 412,222 12/31/2021 740,615,924 436,955 06/30/2022 463,173 12/31/2022 741,516,052 10,615,924 10,615,924 $ 730,000,000 06/30/2022 12/31/2022 (15,715,796) (5,099,872) Calculation General Journal 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 A View transaction list X: 1 Record the interest expense. 2 Record the interest expense. 3 Record the entry to adjust the bonds to their fair value for presentation in the December 31, 2021, balance sheet. Federal determined that none of the change in fair value was due to a decline in general interest rates. Credit 4 Record the interest expense. olo 5 Record the interest expense. 6 Record the entry to adjust the bonds to their fair value for presentation in the December 31, 2022, balance sheet. Federal determined that one-half of the increase in fair value was due to a decline in general interest rates
