Problem 3 (20%) To fund its expansions into new markets, Randy Corp. issued $6 million, 8-year notes on January 2, 2015. Interest was to be paid annually (at end of year) and based on London Interbank Offered Rate (LIBOR). Concerned that LIBOR might unexpectedly rise sharply, Randy arranged an interest rate swap with an investment bank where Randy would pay 4.5% fixed and received LIBOR based on $6 million for the term of the notes. The LIBOR rate for the first year (2015) was 4.8%. The LIBOR rate was reset to 5.1% on January 2, 2016. Randy followed IFRS and used hedge accounting. On December 31, 2015, the fair value of the swap increased by $104,000. It increased by another $106,500 on December 31, 2016. (1) Prepare journal entries for the signing of the swap contract on Jan. 2, 2015. (2) Prepare journal entries for the receipt and/or payment of interest on December 31, 2015 and December, 2016. (3) Prepare journal entries to adjust the book value of the swap contract at the ends of 2015 and 2016