Federal Semiconductors issued 9% bonds, dated January 1, with a face amount of $760 million on January 1, 2021. The bonds sold for $694,795,472 and mature on December 31, 2040 (20 years). For bonds of similar risk and maturity the market yield was 10%. 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 $680 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 $686 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. Rour answers to the nearest whole dollars.) Increase Semiannual Cash Bond Fair value Increase in Interest Interest (decrease) Carrying Interest adjustment Balance Fair Value in Fair Period-End Value Paid Expense balance needed value adjustment S 01/01/2021 $ 694,795,472 0 06/30/2021 $42,900,000 $ 43,279,167 S 379,167 695,174,639 S 12/31/2021 42,900,000 $ 43,301,917 401,917 695,576,556 680,000,000 $ 710,000,000 12,100,525 06/30/2022 42,900,000 43,326,032 X 426,032 696,002,588 12/31/2022 $ 42,900,000 43,351,593 451,593 696,454,181 686,000,000 $ 716,000,000 6,978, 150 Fair Value Adjustment 01/01/2021 06/30/2021 01/01/2021 06/30/2021 12/31/2021 12/31/2021 Bonds Payable 694,795,472 379,167 401,917 695,576,556 426,032 451,593 696,454,181 S 710,000,000 710,000,000 $ (14,423,444) 06/30/2022 12/31/2022 06/30/2022 12/31/2022 6,000,000 716,000,000 $ (19,545,819) 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 No Debit Credit Date June 30, 2021 1 General Journal Interest expense Discount on bonds payable Cash 43,279,167 379,167 42,900,000 2 43,301,917 % December 31, 202 Interest expense Discount on bonds payable Cash 401,917 > 42,900,000 3 12,100,525 December 31, 202 Fair value adjustment Loss on bonds payable (unrealized, NI) 12,100,525 4 June 30, 2022 43,326,032 Interest expense Discount on bonds payable Cash 426,032 42,900,000 5 433,531,593 December 31, 202 Interest expense Discount on bonds payable Cash 451,593 42,900,000 6 December 31, 202 Loss on bonds payable (unrealized, NI) Loss on bonds payable (unrealized, OCI) Fair value adjustment 3,000,000 2,122,375 5,122,375 X