Valix Finacc vol 1 Problem 14-5

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 14-5

   2008

Jan.   1   Cash                                                                                   6,000,000

                        Loan payable                                                                                    6,000,000

Dec. 31   Interest expense                                                                    600,000

                        Cash (10% x 6,000,000)                                                             600,000

         31   Interest rate swap receivable                                              159,300

                        Unrealized gain – interest rate swap (180,000 x .885)                          159,300

   2009

Dec. 31   Interest expense                                                                    780,000

                        Cash (13% x 6,000,000)                                                             780,000

         31   Cash                                                                                                180,000

                        Interest rate swap receivable                                                             159,300

                        Unrealized gain – interest rate swap                                                     20,700

         31   Loan payable                                                                    6,000,000

                        Cash                                                                                                  6,000,000

         31   Unrealized gain – interest rate swap                                               180,000

                        Interest expense                                                                                   180,000