On January 1, 2020, Miron Ltd. issues a floating rate bond for $ 500,000. At the same time, the corporation enters into an interest rate swap whereby it agrees to pay interest on $ 500,000 at 10% (the current interest rate) and to receive payments based on the floating rate. At December 31, 2020, the floating interest rate is 8%, and the value of the swap contract is $ 40,000 to the counterpartys benefit.

Prepare any journal entries required related to the swap agreement and the interest payment on the bond.

a) January 1, 2020

b) December 31, 2020 interest payment on the bond

c) December 31, 2020 Payment of swap interest (net)

d) December 31, 2020 Record swap contract asset/liability.