Illini Corporation acquired as a long$-$term investment $$240$ million of $6\%$ bonds, dated July $1,$ on July $1,2018.$ Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate $($yield$)$ was $8\%$ for bonds of similar risk and maturity. Illini paid $$200$ 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 $31,2018,$ was $$210$ million.

Required:$1.$ Prepare journal entries for Illini on July $1,2018$ and on December $31,2018\mathrm{.}2.$ At what amount will Illini report its investment in the December $31,2018,$ balance sheet $($record entries if needed$)?$ What is the impact on $2018$ income statement?$3.$ Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Illini to sell the investment on January $2,2019,$ for $$190$ million. Prepare the journal entry to record the sale. What is the impact on $2019$ income statement?$4.$ If Illini originally classified the investment as TS or AFS, or elected the fair value option, how would you answer the previous questions?