On January $1,2024,$ Oriole Company purchased $$500,000$ of Nest Corporation$$s five$-$year, $4\%$ notes at par, with interest receivable semiannually. The company classified the investment as available$-$for$-$sale.

To hedge the risk that general interest rates will increase and the fair market value of its investment in AFS debt securities will decrease, Oriole entered into a five$-$year plain vanilla interest rate swap agreement on January $1,2024,$ and designated the swap as a fair value hedge.

The agreement called for the company to make payments based on a $4\%$ fixed interest rate on a notional amount of $$500,000$ and to receive interest based on a floating interest rate $($SOFR$).$ The contract called for cash settlement of the net interest amount semiannually on June $30$ and December $31,$ based on beginning$-$of$-$period rates.

Oriole qualifies for and elects to use the shortcut method.

Floating $($market$)$ settlement rates were $3\%$ at June $30,2024,5\%$ at December $31,2024,$ and $5\mathrm{.}5\%$ at June $30,2025.$ The fair values of the swap on those dates are quotes obtained from a derivatives dealer and are listed below.

$1/1/246/30/2412/31/246/30/25$

Interest revenue$$AFS security $ $10,000$ $ $10,000$ $ $10,000$

Fixed rate$$swap $4\%4\%4\%4\%$

Floating rate$$swap $4\%3\%`5\%5\mathrm{.}5\%$

Fair value of interest rate swap $ $0$ $ $(20,901)$ $ $17,925$ $ $23,585$

Required:

Calculate the net cash settlement at June $30$ and December $31,2024,$ and June $30,2025.$

Prepare the journal entries through June $30,2025,$ to record the investment in available$-$for$-$sale debt securities$,$ interest, and necessary adjustments for changes in fair value.