Mills Corporation acquired as a long-term investment $235 million of 8% bonds, dated July 1, on...

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Mills Corporation acquired as a long-term investment $235 million of 8% 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 6% for bonds of similar risk and maturity. Mills paid $270 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: 1. & 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. 3. At what amount will Mills report its investment in the December 31, 2024, balance sheet? 4. 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 entries required on the date of sale. 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 5.5). Show less View transaction list View journal entry worksheet General Journal No Date 1 July 01, 2024 Investment in bonds Premium on bond investment Cash 2 December 31, 2024 Cash Premium on bond investment Interest revenue < Req 1 and 2 Req 3 > Debit Credit 235.0 35.0 270.0 9.4 1.3 8.1 Req 1 and 2 Req 3 Req 4 At what amount will Mills report its investment in the December 31, 2024, balance sheet? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5). Investment $ 260 million Journal entry worksheet < 1 2 3 Record the fair-value adjustment. Note: Enter debits before credits. Date General Journal January 02, 2025 Fair value adjustment Gain on investment (unrealized, OCI) Debit Credit 20.0 20.0 View general journal Record entry Clear entry > Journal entry worksheet 1 2 3 Record any reclassification adjustment. Note: Enter debits before credits. Date General Journal Debit Credit January 02, 2025 Reclassification adjustment (OCI) Fair value adjustment Record entry Clear entry View general journal Journal entry worksheet < 1 2 3 Record the sale of the investment by Mills. Note: Enter debits before credits. Date January 02, 2025 General Journal Debit Credit Record entry Clear entry View general journal Mills Corporation acquired as a long-term investment $235 million of 8% 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 6% for bonds of similar risk and maturity. Mills paid $270 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: 1. & 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. 3. At what amount will Mills report its investment in the December 31, 2024, balance sheet? 4. 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 entries required on the date of sale. 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 5.5). Show less View transaction list View journal entry worksheet General Journal No Date 1 July 01, 2024 Investment in bonds Premium on bond investment Cash 2 December 31, 2024 Cash Premium on bond investment Interest revenue < Req 1 and 2 Req 3 > Debit Credit 235.0 35.0 270.0 9.4 1.3 8.1 Req 1 and 2 Req 3 Req 4 At what amount will Mills report its investment in the December 31, 2024, balance sheet? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5). Investment $ 260 million Journal entry worksheet < 1 2 3 Record the fair-value adjustment. Note: Enter debits before credits. Date General Journal January 02, 2025 Fair value adjustment Gain on investment (unrealized, OCI) Debit Credit 20.0 20.0 View general journal Record entry Clear entry > Journal entry worksheet 1 2 3 Record any reclassification adjustment. Note: Enter debits before credits. Date General Journal Debit Credit January 02, 2025 Reclassification adjustment (OCI) Fair value adjustment Record entry Clear entry View general journal Journal entry worksheet < 1 2 3 Record the sale of the investment by Mills. Note: Enter debits before credits. Date January 02, 2025 General Journal Debit Credit Record entry Clear entry View general journal

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