On January 1, 2023, Fontaine Corporation issued an $800,000 notes payable to Allegheny State Bank. The note pays coupon payments at the rate of 5%, which is also the market rate of interest when the note was issued. The note matures in three years. Fontaine Corporation entered into an interest rate swap with the same maturity and notional amount to hedge against falling interest rates. The swap will result in Fontaine Corporation paying floating rate interest tied to the prevailing LIBOR rate and receiving fixed rate interest at 5%. Interest payments and cash settlement occur at the end of each year. LIBOR settlement rates at the end of 2023, 2024, and 2025 are 6%, 7%, and 6%, respectively.   a) Prepare the required journal entries for Fontaine Corporation using the shortcut method for 2023-2025. b) Indicate how the above entries affect Fontaine Corporation’s reported net earnings for each year.

On January 1, 2022, Slack Company finished legal services and accepted in exchange a 5% $400,000 promissory note with a due date of December 31, 2024.  Interest is receivable on January 1 of each year. Notes with similar risk have a market rate of interest of 10%.  Set financial calculators to zero decimal place.   Required: (a)  Determine the value of the following: N = Answer 1 Question 3 I/Y = Answer 2 Question 3 PMT = $Answer 3 Question 3 FV = $Answer 4 Question 3   (b)  The present value of the note was $Answer 5 Question 3 (c)  Prepare a Schedule of Note Discount/Premium Amortization for Slack Company under the effective interest method.  Slack Company Schedule of Note Discount/Premium Amortization Effective Interest Method   Date   Cash   Interest Amortized Amount Carrying Value of Note Jan 1, 2022       $Answer 6 Question 3 Dec 31, 2022 $Answer 7 Question 3 $Answer 8 Question 3 $Answer 9 Question 3 Answer 10 Question 3 Dec 31,…

On December 31, 2024, when the market interest rate is 8%, McMann Realty issues $700,000 of 5.25%, 10-year bonds payable. The bonds pay interest semiannually. Determine the present value of the bonds at issuance. (Round all currency amounts to the nearest whole dollar) (Click the icon to view Present Value of $1 table.) (Click the icon to view Future Value of $1 table.) The present value of the bonds at issuance amounts to (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) EXE

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