On January $1,2024,$ Essence Communications issued $$890,000$ of its $10-$year, $8\%$ bonds for $$779,086.$

The bonds were priced to yield $10\%.$

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 $31,2024,$ the market interest rate for bonds of similar risk and maturity was $9\%.$

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. On January $1,2024,$ Essence Communications issued $\backslash$$$890,000$ of its $10-$year, $8\backslash \%$ bonds for $\backslash$$$779,086.$

$-$ The bonds were priced to yield $\backslash (10\backslash \%\backslash ).$

$-$ 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 $31,2024,$ the market interest rate for bonds of similar risk and maturity was $\backslash (9\backslash \%\backslash ).$

$-$ The bonds are not traded on an active exchange.

$-$ The decrease in the market interest rate was due to a $\backslash (1\backslash \%\backslash )$ decrease in general $($risk$-$free$)$ interest rates.

Note: Use tables, Excel, or a financial calculator. $($FV of $\backslash$$$1,$ PV of $\backslash$$$1,$ FVA of $\backslash$$$1,$ PVA of $\backslash$$$1,$ FVAD of $\backslash$$$1$ and PVAD of $\backslash$$$1)$

Required:

$1.$ Using the information provided, estimate the fair value of the bonds at December $31,2024.$

$2.$ to $4.$ Prepare the journal entries to record interest on June $30,2024($the first interest payment$),$ on December $31,2024($the second interest payment$)$ and to adjust the bonds to their fair value for presentation in the December $31,2024,$ balance sheet.

Complete this question by entering your answers in the tabs below.

Req $2$ to $4$

Using the information provided, estimate the fair value of the bonds at December $31,2024.$

Note: Round final answer to the nearest whole dollar.

Fair value of the bonds On January $1,2024,$ Essence Communications issued $\backslash (\backslash$$ $890,000\backslash )$ of its $10-$year, $8\backslash \%$ bonds for $\backslash (\backslash$$ $779,086\backslash ).$

$-$ The bonds were priced to yield $\backslash (10\backslash \%\backslash ).$

$-$ 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 $31,2024,$ the market interest rate for bonds of similar risk and maturity was $\backslash (9\backslash \%\backslash ).$

$-$ The bonds are not traded on an active exchange.

$-$ The decrease in the market interest rate was due to a $\backslash (1\backslash \%\backslash )$ decrease in general $($risk$-$free$)$ interest rates.

Note: Use tables, Excel, or a financial calculator. $($FV of $\backslash$$$1,$ PV of $\backslash$$$1,$ FVA of $\backslash$$$1,$ PVA of $\backslash$$$1,$ FVAD of $\backslash$$$1$ and PVAD of $\backslash$$$1)$

Required:

$1.$ Using the information provided, estimate the fair value of the bonds at December $31,2024.$

$2.$ to $4.$ Prepare the journal entries to record interest on June $30,2024($the first interest payment$),$ on December $31,2024($the second interest payment$)$ and to adjust the bonds to their fair value for presentation in the December $31,2024,$ balance sheet.

Answer is not complete.

Complete this question by entering your answers in the tabs below.

Req $2$ to $4$

Prepare the journal entries to record interest on June $30,2024($the first interest payment$),$ on December $31,2024($the second interest payment$)$ and to adjust the bonds to their fair value for presentation in the December $31,2024,$ balance sheet.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entries required" in the first account field. Round final answers to the nearest whole dollars.