Please do not give image format Exercise 12-2 (Algo) Securities held-to-maturity; bond investment; effective interest, premium; financialstatement effects [LO12-1, 12-2]Mills Corporation acquired as a long-term investment $245 million of 8% bonds, dated July 1, on July 1, 2024. Company managementhas the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 6% for bonds of similar risk andmaturity. Mills paid $280.0 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As aresult of changing market conditions, the fair value of the bonds at December 31, 2024, was $260.0 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 theeffective (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 $295 million. Prepare the ournal entry to record the sale.Answer is not complete.Complete this question by entering your answers in the tabs below.Req 1 and 2Req 3Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment onJanuary 2, 2025, for $295 million. Prepare the journal entry to record the sale.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not roundintermediate calculations. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as5.5).Req 4Show less A Complete this question by entering your answers in the tabs below.Req 1 and 2Req 3Req 4Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment onJanuary 2, 2025, for $295 million. Prepare the journal entry to record the sale.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not roundIntermediate calculations. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as5.5).No12DateGeneral JournalJanuary 02, 2025 Gain on investments (NI)Premium on bond investmentCashJanuary 02, 2025 CashInterest revenuePremium on bond investment< Req3Rog 4* * *>**Debit245359.8Show less ACredit2808.4 X1.4

The term "bond issued at a premium" means the bonds whose coupon rate is greater than the standard…

Exercise 12-2 (Algo) Securities held-to-maturity; bond investment; effective interest, premium; financia statement effects [LO12-1, 12-2] Mills Corporation acquired as a long-term investment $245 million of 8% bonds, dated July 1, on July 1, 2024. Company managemer has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 6% for bonds of similar risk an maturity. Mills paid $280.0 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 $260.0 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 2025, for $295 million. Prepare the ournal entry to record the sale. Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 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 $295 million. Prepare the journal entry to record the sale. 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).

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q