LLB Industries borrowed $$200,000$ from Trust Bank by issuing a two$-$year, $10\%$ note, with interest payable quarterly.

LLB entered into a two$-$year interest rate swap agreement on January $1,2024,$ and designated the swap as a fair value hedge. Its

intent 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 $$200,000$

and to pay interest based on a floating interest rate and 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 $30,2024.$ The fair values of the swap are

quotes obtained from a derivatives dealer. Those quotes and the fair values of the note are as indicated below. The additional

rise in the fair value of the note $($higher than that of the swap$)$ on June $30$ was due to investors' perceptions that the

creditworthiness of LLB was improving. Assume LLB uses the shortcut method.

Required:

Calculate the net cash settlement at June $30,2024.$

Prepare the journal entries on June $30,2024,$ to record the interest and necessary adjustments for changes in fair value.

Complete this question by entering your answers in the tabs below.

Required $2$

Prepare the journal entries on June $30,2024,$ to record the interest and necessary adjustments for changes in fair value.

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

To record interest on the note.

To record the net cash settlement on the swap.

Record the change in fair value of the derivative.

Record the change in fair value of the note due to

interest.