A company acquired as a long$-$term investment $$150$ million of $4\mathrm{.}0\%$ bonds, dated July $1,$ on July $1,$ Year $1.$ Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate $($yield$)$ was $6\%$ for bonds of similar risk and maturity. The company paid $$120\mathrm{.}0$ million for the bonds. The company will receive interest semiannually on June $30$ and December $31.$ As a result of changing market conditions, the fair value of the bonds at December $31,$ Year $1,$ was $$130\mathrm{.}0$ million.

Required:

$1.$ & $2.$ Prepare the journal entry to record the company's investment in the bonds on July $1,$ Year $1$ and interest on December $31,$ Year $1,$ at the effective $($market$)$ rate.

$3.$ At what amount will the company report its investment in the December $31,$ Year $1,$ balance sheet?

$4.$ Suppose Moody$$s bond rating agency downgraded the risk rating of the bonds motivating the company to sell the investment on January $2,$ Year $2,$ for $$100\mathrm{.}0$ million. Prepare the journal entry to record the sale.