On December $31,2025,$ Bridgeport Corp. had a $\backslash$$$12,400,000,8\backslash \%$ fixed$-$rate note outstanding, payable in $2$ years. It decides to enter into a $2-$year swap with Chicago First Bank to convert the fixed$-$rate debt to variable$-$rate debt. The terms of the swap indicate that Bridgeport will receive interest at a fixed rate of $\backslash (8\backslash \%\backslash )$ and will pay a variable rate equal to the $6-$month LIBOR rate, based on the $\backslash (\backslash$$ $12,400,000\backslash )$ amount. The LIBOR rate on December $31,2025,$ is $\backslash (7\mathrm{.}0\backslash \%\backslash ).$ The LIBOR rate will be reset every $6$ months and will be used to determine the variable rate to be paid for the following $6-$month period.

Bridgeport Corp. designates the swap as a fair value hedge. Assume that the hedging relationship meets all the conditions necessary for hedge accounting. The $6-$month LIBOR rate and the swap and debt fair values are as follows.

$($a$)$

Your Answer Correct Answer $($Used$)$

Present the journal entries to record the following transactions.

$1.$ The entry, if any, to record the swap on December $31,2025.$

$2.$ The entry to record the semiannual debt interest payment on June $30,2026.$

$3.$ The entry to record the settlement of the semiannual swap amount receivables at $\backslash (8\backslash \%\backslash ),$ less amount payable at LIBOR, $\backslash (7\mathrm{.}0\backslash \%\backslash ).$

$4.$ The entry to record the change in the fair value of the debt on June $30,2026.$

$5.$ The entry to record the change in the fair value of the swap at June $30,2026.$

$($List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent

$(1)$

$(2)$

$(3)$

$(4)$

Unrealized Holding Gain or Loss $-$ Income

$($To record the change in fair value of the debt.$)$

$(5)$

Unrealized Holding Gain or Loss $-$ Income

Swap Contract

$($To record the change in fair value of the swap.$)$

$($b$)$

X Your answer is incorrect.

Indicate the amount$($s$)$ reported on the balance sheet and income statement related to the debt and swap on December $31,2025.$

$($If no entry is required, select $"$No Entry" for the account titles and enter O for the amounts.$)$

Balance Sheet

Income Statement

Unrealized Holding Gain or Loss $-$ Income

PLEASE ANSWER PART $($B$)$