1. Using the following information, prepare journal entries for the year 2018 and indicate how XYZ Corp. should report its investment in its year end financial statements:

• the investment is considered Held to maturity.
• On January 1, 2018, JKL issued $6,000,000 of 8% bonds, due on January 1, 2026.
• The bonds, which pay interest semiannually on January 1 and July 1, were purchased by XYZ Corp. for $5,349,725 to yield 10%.
• The fair value at December 31, 2018, is $5,340,000.

2. Using the information on problem 2, prepare journal entries for the year 2018 but assuming the investment is considered Trading securities. Also, indicate how XYZ should report its investment in its year end financial statements.