Exercise $12-2($Algo$)$ Securities held$-$to$-$maturity; bond investment; effective interest, premium; financial

statement effects $[$LO$12-1,12-2]$

Mills Corporation acquired as a long$-$term investment $$220$ million of $6\%$ bonds, dated July $1,$ on July $1,2024.$ Company management

has the positive intent and ability to hold the bonds until maturity. The market interest rate $($yield$)$ was $4\%$ for bonds of similar risk and

maturity. Mills paid $$270\mathrm{.}0$ 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 $$250\mathrm{.}0$ million.

Required:

& $2.$ Prepare the journal entry to record Mills' investment in the bonds on July $1,2024$ and interest on December$\mathrm{.}31,2024,$ 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 $$280$ million. Prepare the journal entry to record the sale.