Problem 4 (16 points) Illini Inc. acquired as a long-term investment $120 million of 6% bonds, dated July 1, on July 1, 2021. Illini classified the investment as trading securities (TS). The market interest rate (yield) was 8% for bonds of similar risk and maturity. Illini paid $100 million for the bonds. Illini will receive interest semiannually on June and December 31. As a result of changing market conditions, the fair value of the bonds on December 31, 2021, was $105 million. Required: 1. Prepare journal entries for Illini on July 1, 2021 and on December 31, 2021. At what amount will Illini report its investment in the December 31, 2021, balance sheet? What is the impact of the investment on 2021 income statement?

Problem 4 (16 points) Illini Inc, acquired as a long-term investment $120 million of 6% bonds, dated July 1 , on July 1 . 2021. Illini classified the investment as trading securities (TS). The market interest rate (yield) was 8% for bonds of similar risk and maturity. Illini paid $100 million for the bonds. Illini 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 31,2021 , was $105 million. Required: 1. Prepare journal entries for Illini on July 1,2021 and on December 31,2021. At what amount will IIlini report its investment in the December 31,2021, balance sheet? What is the impact of the investment on 2021 income statement