26 on December 31, 2016. It decides to change the interest rate from a Fixed ate

Question

26 on December 31, 2016. It decides to change the interest rate from a Fixed ate to variable rate and enters $11,300 as an adjustment to interest expense for the settlement at December 31, 2017. The loss related to the delt (due to interest rate 8.10% fixed-rate interest only, that headland will receive a fixed rate at 8.10%and pay swap agree duning 2017 and that h that interest rates have changes) was $47,300. The vakue of the swap contract increased $47,300 (a) Prepare the journal entry to record the payment of interest experse on December 31, 2017 (b) Prepare the journal entry to record the receipt of the swap settlement on December 31, 2017 (e) Prepare the jpournal entry to recond the change in the fair value of the swap contract on December 31, 2017 (d) Prepare the journal entry to record the charge in the far value of the dett on December 31, 2017 Debit

Explanation / Answer

a.

Interest expense $68040

To cash $68040

$840000 * 8.10% = $68040.

b.

Cash $11300

To interest expense $11300

c.

Interest rate swap $47300

To (holding gain interest rate swap) $68040

d.

Holding loss $47300

To notes payable $47300

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