On 1/1/20X1, Illini issued 10% bonds dated 1/1/20X1, with a face amount of $40,000. The bonds mature on 12/31/20X4 (4 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. Suppose Illini elects the fair value option to account for these (and only these) bonds and adjust for the fair value changes on every June 30 and December 31. The market interest rates for bonds of similar risk and maturity on 6/30/20X1, 12/31/20X1, 6/30/20X2, and 12/31/20X2 are 10%, 8%, 12%, and 15% respectively. All interest rate changes are due to Illinis own credit risk changes.

Please refer to the instructions and the table in this question. Enter the correct numeric figures for journal entries below:

Project 2.1 Part 3 Journal Entries

Date	Account Name (Debit)	Account Name (Credit)	Debit	Credit
1/1/20X1	Cash		[A]
	Discount on bonds		[B]
		Bonds payable		[C]
6/30/20X1	Interest expense		[D]
		Discount on bonds		[E]
		Cash		[F]
6/30/20X1	Unrealized holding gain/loss-OCI		[G]
		Fair value adjustment		[H]
12/31/20X1	Interest expense		[I]
		Discount on bonds		[J]
		Cash		[K]
12/31/20X1	Unrealized holding gain/loss-OCI		[L]
		Fair value adjustment		[M]
6/30/20X2	Interest expense		[N]
		Discount on bonds		[O]
		Cash		[P]
6/30/20X2	Fair value adjustment		[Q]
		Unrealized holding gain/loss-OCI		[R]
12/31/20X2	Interest expense		[S]
		Discount on bonds		[T]
		Cash		[U]
12/31/20X2	Fair value adjustment		[V]
		Unrealized holding gain/loss-OCI		[W]