Record the second interest payment on December

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Question - Zooey Inc. issued  6% bonds with a face of $840,000,000 for $776,000,000 cash on January 1, 2021, when the market effective rate was 8%. Zooey pays interest semiannually on June 30 and December 31, records interest at the effective rate, and elected the option to report these bonds at their fair value at year-end, 12/31. There was no change in rates during the first 6 months of 2021. On December 31, 2021, the fair value of the bonds was $792,000,000, and $1,000,000 of the increase in fair value was due to a change in the general (risk-free) rate of interest.

Required -

1. Record the first interest payment on June 30, 2021.

2. Record the second interest payment on December 31, 2021.

3. Record the fair value adjustment on December 31, 2021.

Reference no: EM132968680

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