Tata group of companies acquired as a long-term investment $240 million of 6% bonds 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. Tata group of companies 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 on December 31, 2018, was $210 million.

Required:

1. Prepare the journal entry to record the investment in the bonds on July 1, 2018.
2. Prepare the amortization schedule for the bonds till December 31^st, 2018.
3. Prepare the journal entries by Tata group of companies to record interest on December 31, 2018.
4. At what amount will the company report its investment in the December 31, 2018, balance sheet?
5. Suppose S&Ps bond rating agency downgraded the risk rating of the bonds motivating Tata Group of companies to sell the investment on January 2, 2019, for $190 million. Prepare the journal entry to record the sale.