The company has one asset, a bond (called Bond B) that it purchased (on the day it was issued) as an investment, and one liability, one of its own bonds (called Bond X) that the company issued to finance the purchase of the Bond B investment. The company had no initial shareholder investment. Both bonds have the same terms: $700 face value, 30-year life, 8% coupon rate, and single interest payments made at the end of each year. On their issuance dates, both bonds were associated with a market interest rate of 8%. The company has determined to account for both the bond asset and the bond liability using the fair value option.

1. Prepare a balance sheet for the company as of the issuance date of investment Bond B and the company's own Bond Payable X. If an account is not affected, enter zero for the answer.

2. On the very next day, the market interest rate with respect to Bond B had risen to 13% and the market interest rate with respect to Bond Payable X had risen to 11%. Compute the present value using a financial calculator instead of the compound interest tables, and round your answers to the nearest dollar. Prepare the company's balance sheet. Enter non-normal account balances as negative amounts.