A company acquired as a long-term investment $180 million of 7.0% 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 9% for bonds of similar risk and maturity. The company paid $160.0 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 $160.0 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 $130.0 million. Prepare the journal entry to record the sale.