On January $1,20$X$1,$ Nicks Corporation issued $$250$ million of floating$-$rate debt. The debt carries a contractual interest rate of $$LIBOR plus $5\mathrm{.}5\%,$ which is reset annually on January $1$ of each year. The LIBOR rates on January $1,20$X$1,20$X$2,$ and $20$X$3,$ were $6\mathrm{.}5\%,7\mathrm{.}0\%,$ and $5\mathrm{.}5\%,$ respectively.

Required:

Prepare a journal entry to record the issuance of the bonds on January $1,20$X$1,$ at par. What was the effective $($or market$)$ interest rate when the bonds were issued?

Prepare a journal entry to record interest expense for $20$X$1,20$X$2,$ and $20$X$3.$ Assume that interest is paid annually on December $31.$

What is the market value of the debt at December $31,20$X$3,$ assuming Nicks Corporation$$s credit risk has not changed$\mathrm{.}1.$ Prepare a journal entry to record the issuance of the bonds on January $1,20$X$1,$ at par. $($If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Do not round intermediate calculations