Question: Refer to Practice 19-1. Make any necessary journal entry on the borrowing companys books on December 31 of Year 1 in connection with the interest

Refer to Practice 19-1. Make any necessary journal entry on the borrowing company’s books on December 31 of Year 1 in connection with the interest rate swap, assuming that the prime lending rate on December 31 is

(1) 7%,

(2) 15%, and

(3) 10%.

Even though the swap payment is not made until December 31 of Year 2, for simplicity ignore the time value of money.


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