7 Mills Corporation acquired as a long-term investment $235 million of 8% bonds, dated July 1, on July 1, 2024. Companymanagement has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 6%for bonds of similar risk and maturity. Mills paid $270.0 million for the bonds. The company will receive interestsemiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds atDecember 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 investmenton January 2, 2025, for $280 million. Prepare the journal entry to record the sale.Complete this question by entering your answers in the tabs below.Req 1 and 2Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on Janualfor $280 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 as 5.SIView transaction listNoReq 312DateJanuary 02,2025January 02,2025Req 4View journal entry worksheetNo journal entry requiredCashInvestment in bondsGeneral JournalGain on investments (NI)< Req 3Req 4 >Debit280.0268.7Credit11.3 Mills Corporation acquired as a long-term investment $235 million of 8% bonds, dated July 1, on July 1, 2024. Companymanagement has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 6%for bonds of similar risk and maturity. Mills paid $270.0 million for the bonds. The company will receive interestsemiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds atDecember 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 investmenton January 2, 2025, for $280 million. Prepare the journal entry to record the sale.Answer is not complete.Complete this question by entering your answers in the tabs below.Req 1 and 2NoPrepare the journal entry to record Mills'investment in the bonds on July 1, 2024 and interest on December 31, 2024, at theeffective (market) rate.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).1Req 32DateJuly 01, 2024Req 4Investment in bondsCashDecember 31, 2024 CashGeneral JournalPremium on bond investmentInterest revenueDebit270.09.41.3 XShow lessCredit270.08.1

A bond is typically a type of debt security. In order to raise money from investors who are ready to…

Mills Corporation acquired as a long-term investment $235 million of 8% 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 6% for bonds of similar risk and maturity. Mills paid $270.0 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 2, 2025, for $280 million. Prepare the journal entry to record the sale.

Mills Corporation acquired as a long-term investment $235 million of 8% 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 6% for bonds of similar risk and maturity. Mills paid $270.0 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 2, 2025, for $280 million. Prepare the journal entry to record the sale.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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