Exercise $12-11($Algo$)$ Available$-$for$-$sale securities; financial statement effects $[$LO$12-1,12-4]$

Mills Corporation acquired as a long$-$term investment $$240$ million of $7\%$ bonds, dated July $1,$ on July $1,2024.$ Company management has classified the bonds as an available$-$for$-$sale investment. The market interest rate $($yield$)$ was $5\%$ for bonds of similar risk and maturity. Mills paid $$280$ 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 $31,2024,$ was $$260$ million.

Required:

& $2.$ Prepare the journal entry to record Mills' investment in the bonds on July $1,2024$ and interest on December $31,2024,$ at the effective $($market$)$ rate.

At what amount will Mills report its investment in the December $31,2024,$ balance sheet?

Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January $2.2025,$ for $$290$ million. Prepare the journal entries required on the date of sale.

Complete this question by entering your answers in the tabs below.

Req $1$ and $2$

Req $3$

Req $4$

Prepare the journal entry to record Mills' investment in the bonds on July $1,2024$ and interest on December $31,2024,$ at the effective $($market$)$ rate.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to $1$ decimal place, $($i$.$e$.,5,500,000$ should be entered as $5\mathrm{.}5).$