On July 1, 2020, Lake County issued $50,000,000 in variable rate debt, with interest paid on June 30 of each year, the county's fiscal year-end. The variable rate is adjusted at the beginning of each year. The variable rate for fiscal 2021 was 3.6%. On the same date, the county entered a receive variable/pay fixed interest rate swap, where the county pays a 3.45% fixed rate to a counterparty. The swap qualifies for hedge accounting. By the end of fiscal 2021, the variable rate has declined to 3.4% and the swap has declined in value by $100,000. By the end of fiscal 2022, the variable rate has fallen to 3.38%, the swap declines in value by $75,000, and the county discontinues use of hedge accounting for the swap.
Required
Make the journal entries necessary to record the above events on Lake County's government-wide financial statements for fiscal 2021 and fiscal 2022.

Question

Quizplus · Accepted Answer

The Answer of On July 1, 2020, Lake County issued $50,000,000 in variable rate debt, with interest paid on June 30 of each year, the county's fiscal year-end. The variable rate is adjusted at the beginning of each year. The variable rate for fiscal 2021 was 3.6%. On the same date, the county entered a receive variable/pay fixed interest rate swap, where the county pays a 3.45% fixed rate to a counterparty. The swap qualifies for hedge accounting. By the end of fiscal 2021, the variable rate has declined to 3.4% and the swap has declined in value by $100,000. By the end of fiscal 2022, the variable rate has fallen to 3.38%, the swap declines in value by $75,000, and the county discontinues use of hedge accounting for the swap.
Required
Make the journal entries necessary to record the above events on Lake County's government-wide financial statements for fiscal 2021 and fiscal 2022.

On July 1, 2020, Lake County Issued $50,000,000 in Variable