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On January, 20x1, Cedula Co. enters into an interest rate swap for a notional amount of 1,000,000. Under the agreement, ABC Co. shall receive variable

On January, 20x1, Cedula Co. enters into an interest rate swap for a notional amount of 1,000,000. Under the agreement, ABC Co. shall receive variable interest and pay fixed interest based on a fixed rate of 14%. The interest rate swap will be settled net on December 31, 20x2.

The following are the current market rates: Jan.1, 20x1 14% Jan.1, 20x2 12%

Provide Journal entries.

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