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Please help with the last entry, thanks! On January 1, 2016, Rapid Airlines issued $255 million of its 8% bonds for $239 million. The bonds
Please help with the last entry, thanks!
On January 1, 2016, Rapid Airlines issued $255 million of its 8% bonds for $239 million. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Rapid Airlines records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2016, the fair value of the bonds was $244 million as determined by their market value in the over-the- counter market. Rapid determined that $1,000,000 of the increase in fair value was due to a decline in general interest rates. Required 1. to 3. Prepare the journal entry to record interest on June 30, 2016 (the first interest payment), on December 31, 2016 (the second interest payment) and adjust the bonds to their fair value for presentation in the December 31, 2016, balance sheet. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) Answer is not complete No Date General Journal Debit Credit June 30, 2016 Interest expense 11.950.0000 Discount on bonds payable 1.750,000 Cash 10,200,000 December 31 2016 ! 12.037.5000 Interest expense 1,837,500 10,200,000 Discount on bonds payable Cash Decemb 000,000 Unrealized holding loss-NI Unrealized holding loss-oci Fair value adjustment 2016Step by Step Solution
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