Exercise 14-31 Reporting bonds at fair value; calculate fair value [LO14-6] 1.53 points On January 1, 2018, Essence Communications issued $600,000 of its 10-year, 10% bonds for $531,180. The bonds were priced to yield 12%. Interest is payable semiannually on June 30 and December 31. Essence Communications records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2018, the market interest rate for bonds of similar risk and maturity was 11%. The bonds are not traded on an active exchange. The decrease in the market interest rate was due to a 1% decrease in general (risk-free)interest rates. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Using the information provided, estimate the fair value of the bonds at December 31, 2018. 2. to 4. Prepare the journal entry to record interest on June 30, 2018 (the first interest payment), on December 31, 2018 (the second interest payment) and to adjust the bonds to their fair value for presentation in the December 31, 2018, balance sheet. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 to 4 Using the information provided, estimate the fair value of the bonds at December 31, 2018. (Round final answer to the nearest whole dollar.) Present value of the bonds $ 566,264 On January 1, 2018, Essence Communications issued $600,000 of its 10-year, 10% bonds for $531,180. The bonds were priced to yield 12%. Interest is payable semiannually on June 30 and December 31. Essence Communications records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2018, the market interest rate for bonds of similar risk and maturity was 11%. The bonds are not traded on an active exchange. The decrease in the market interest rate was due to a 1% decrease in general (risk-free)interest rates. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1.53 points Required: 1. Using the information provided, estimate the fair value of the bonds at December 31, 2018. 2. to 4. Prepare the journal entry to record interest on June 30, 2018 (the first interest payment), on December 31, 2018 (the second interest payment) and to adjust the bonds to their fair value for presentation in the December 31, 2018, balance sheet. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 to 4 Prepare the journal entry to record interest on June 30, 2018 (the first interest payment), on December 31, 2018 (the second interest payment) and to adjust the bonds to their fair value for presentation in the December 31, 2018, balance sheet. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round final answers to the nearest whole dollars.) Show less Credit No 1 Date June 30, 2018 Debit 31,871 General Journal Interest expense Discount on bonds payable Cash 1,871 30,000 2 31,983 December 31, 201 Interest expense Discount on bonds payable Cash 1,983 30,000 3 35,084 December 31, 201 Unrealized holding lossNI Fair value adjustment 35,084