Prepare the journal entries required

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Question - On January 1, 2020, Miron Ltd. issues a floating rate bond for $ 500,000. At the same time, the corporation enters into an interest rate swap whereby it agrees to pay interest on $ 500,000 at 10% (the current interest rate) and to receive payments based on the floating rate. At December 31, 2020, the floating interest rate is 8%, and the value of the swap contract is $ 40,000 to the counterparty's benefit.

Instructions - Prepare the journal entries required related to the swap agreement and the interest payment on the bond.

a) January 1, 2020

b) December 31, 2020 - interest payment on the bond

c) December 31, 2020 -Payment of swap interest (net)

d) December 31, 2020 -Record swap contract asset/liability.

Reference no: EM132653519

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