Vermont Cheese Company has a $5,000,000, 7% bank loan from National Bank. On January 1, 2014, the bank loan has three years to maturity. Vermont enters into a three-year interest rate swap with Cheese Investments with a $5 million notional. The agreement calls for Vermont to receive a fixed interest rate of 7% and pay a variable rate based on LIBOR at the beginning of the year. Payments are to be made for the net amount at each year-end. At the beginning of 2014, the LIBOR rate is 6.75%. The three-year fixed rate at the end of 2014 is 9%.
Required:
Prepare the journal entries for Vermont Cheese Company for the bank loan and derivative for 2014. (Round answers to the nearest dollar)

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The Answer of Vermont Cheese Company has a $5,000,000, 7% bank loan from National Bank. On January 1, 2014, the bank loan has three years to maturity. Vermont enters into a three-year interest rate swap with Cheese Investments with a $5 million notional. The agreement calls for Vermont to receive a fixed interest rate of 7% and pay a variable rate based on LIBOR at the beginning of the year. Payments are to be made for the net amount at each year-end. At the beginning of 2014, the LIBOR rate is 6.75%. The three-year fixed rate at the end of 2014 is 9%.
Required:
Prepare the journal entries for Vermont Cheese Company for the bank loan and derivative for 2014. (Round answers to the nearest dollar)

Vermont Cheese Company Has a $5,000,000, 7% Bank Loan from National