Federal Semiconductors issued $\backslash (10\backslash \%\backslash )$ bonds, dated January $1,$ with a face amount of $\backslash (\backslash$$ $770\backslash )$ million on January $\backslash (1,2024\backslash ).$

$-$ The bonds sold for $\backslash (\backslash$$ $708,222,420\backslash )$ and mature on December $31,2043(20$ years$).$

$-$ For bonds of similar risk and maturity the market yield was $\backslash (11\backslash \%\backslash ).$

$-$ Interest is paid semiannually on June $30$ and December $31.$

$-$ Federal determines interest at the effective rate.

$-$ Federal elected the option to report these bonds at their fair value.

$-$ On December $31,2024,$ the fair value of the bonds was $\backslash (\backslash$$ $690\backslash )$ million as determined by their market value in the over$-$the$-$counter market.

Assume the fair value of the bonds on December $31,2025,$ had risen to $\backslash (\backslash$$ $696\backslash )$ million.

Required:

Complete the below table to record the following journal entries.

$1.\backslash$& $2.$ Prepare the journal entries to record interest on June $30,2024,$ December $31,2024,$ and adjust the bonds to their fair value for presentation in the December $31,2024$ balance sheet, and record interest on June $30,2025,$ December $31,2025,$ and adjust the bonds to their fair value for presentation in the December $31,2025,$ balance sheet. Federal determined that none of the change in fair value in $2024$ was due to a decline in general interest rates and one$-$half of the increase in fair value in $2025$ was due to a decline in general interest rates. $\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|$c$|$c$|$c$|$c$|\}$

$\backslash$hline Semiannual Interest Period$-$End & Cash Interest Paid & Bond Interest Expense & Increase in Balance & Carrying Value & Fair Value & Fair value adjustment balance needed & Increase $($decrease$)$ in Fair value adjustment $\backslash \backslash$

$\backslash$hline $01/01/2024$ & & & & $\backslash$$ $708,222,420$ & & $\backslash (\backslash$$ $0\backslash )$ & $\backslash \backslash$

$\backslash$hline $06/30/2024$ & & & & & & & $\backslash \backslash$

$\backslash$hline $12/31/2024$ & & & & & $\backslash$$ $690,000,000$ & & $\backslash \backslash$

$\backslash$hline $06/30/2025$ & & & & & & & $\backslash \backslash$

$\backslash$hline $12/31/2025$ & & & & & $\backslash$$ $696,000,000$ & & $\backslash \backslash$

$\backslash$hline & & & & & & & $\backslash \backslash$

$\backslash$hline & Bonds & Payable & & Fair Value A & djustment & & $\backslash \backslash$

$\backslash$hline $01/01/2024$ & & $708,222,420$ & $01/01/2021$ & & & & $\backslash \backslash$

$\backslash$hline $06/30/2024$ & & & $06/30/2021$ & & & & $\backslash \backslash$

$\backslash$hline $12/31/2024$ & & & $12/31/2021$ & & & & $\backslash \backslash$

$\backslash$hline & & & & & & & $\backslash \backslash$

$\backslash$hline $06/30/2025$ & & & $06/30/2022$ & & & & $\backslash \backslash$

$\backslash$hline $12/31/2025$ & & & $12/31/2022$ & & & & $\backslash \backslash$

$\backslash$hline & & & & & & & $\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$ Journal entry worksheet

$1$

$2$

$3$

$4$

$5$

$6$

Note: Enter debits before credits.

$1$ Journal entry worksheet

$1$

$2$

$3$

$4$

$5$

$6$

Record the interest expense.

Note: Enter debits before credits.

$\backslash$begin$\{$tabular$\}\{|$c$|$l$|$l$|$l$|\}$

$\backslash$hline Date & General Journal & Debit & Credit $\backslash \backslash$

$\backslash$hline December $31,2024$ & & & $\backslash \backslash$

$\backslash$hline & & & $\backslash \backslash$

$\backslash$hline & & & $\backslash \backslash$

$\backslash$hline & & & $\backslash \backslash$

$\backslash$hline & & & $\backslash \backslash$

$\backslash$hline & & & $\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$ Journal entry worksheet

$1$

$2$

$3$

$4$

$5$

$6$

Record entry to adjust the bonds to their fair value for presentation in the December $31,2024,$ balance sheet. Federal determined that none of the change in fair value was due to a decline in general interest rates.

Note: Enter debits before credits.

$\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|\}$

$\backslash$hline Date & General Journal & Debit & Credit $\backslash \backslash$

$\backslash$hline December $31,2024$ & & & $\backslash \backslash$

$\backslash$hline & & & $\backslash \backslash$

$\backslash$hline & & & $\backslash \backslash$

$\backslash$hline & & & $\backslash \backslash$

$\backslash$hline & & $\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$