On January $1,2024,$ LLB Industries borrowed $$224,000$ from Trust Bank by issuing a two$-$year, $10\%$ note, with interest payable

quarterly.

LLB entered into a two$-$year interest rate swap agreement on January $1,2024,$ and designated the swap as a fair value hedge. Its

intent was to hedge the risk that general interest rates will decline, causing the fair value of its debt to increase.

The agreement called for the company to receive payment based on a $10\%$ fixed interest rate on a notional amount of $$224,000$

and to pay interest based on a floating interest rate. The contract called for cash settlement of the net interest amount quarterly

and rates reset at the beginning of each period.

Floating $($SOFR$)$ settlement rates were $10\%$ at January $1,8\%$ at March $31,$ and $6\%$ at June $30$ and September $30,2024.$ The fair

values of the swap are quotes obtained from a derivatives dealer. Those quotes and the fair values of the note are as indicated

below. Assume LLB uses the shortcut method.

Required:

Calculate the net cash settlement at March $31,$ June $30,$ and September $30,2024.$

Prepare the journal entries through September $30,2024,$ to record the issuance of the note, interest, and necessary adjustments

for changes in fair value.

Calculate the net cash settlement at March $31$ and June $30,2024,$ assuming that rates reset in arrears.

Prepare the journal entries through June $30,2024,$ assuming that rates reset in arrears, to record the issuance of the note,

interest, and necessary adjustments for changes in fair value.

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Calculate the net cash settlement at March $31$ and June $30,2024,$ assuming that rates reset in arrears.On January $1,2024,$ LLB Industries borrowed $$224,000$ from Trust Bank by issuing a two$-$year, $10\%$ note, with interest payable

quarterly.

LLB entered into a two$-$year interest rate swap agreement on January $1,2024,$ and designated the swap as a fair value hedge. Its

intent was to hedge the risk that general interest rates will decline, causing the fair value of its debt to increase.

The agreement called for the company to receive payment based on a $10\%$ fixed interest rate on a notional amount of $$224,000$

and to pay interest based on a floating interest rate. The contract called for cash settlement of the net interest amount quarterly

and rates reset at the beginning of each period.

Floating $($SOFR$)$ settlement rates were $10\%$ at January $1,8\%$ at March $31,$ and $6\%$ at June $30$ and September $30,2024.$ The fair

values of the swap are quotes obtained from a derivatives dealer. Those quotes and the fair values of the note are as indicated

below. Assume LLB uses the shortcut method.

Required:

Calculate the net cash settlement at March $31,$ June $30,$ and September $30,2024.$

Prepare the journal entries through September $30,2024,$ to record the issuance of the note, interest, and necessary adjustments

for changes in fair value.

Calculate the net cash settlement at March $31$ and June $30,2024,$ assuming that rates reset in arrears.

Prepare the journal entries through June $30,2024,$ assuming that rates reset in arrears, to record the issuance of the note,

interest, and necessary adjustments for changes in fair value.

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Calculate the net cash settlement at March $31$ and June $30,2024,$ assuming that rates reset in arrears.