Mills Corporation acquired as a long-term Investment $260 million of 7% 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 (yleld) was 5% for bonds of similar risk and maturity. Mills paid $320.0 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 $300.0 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 $330 million. Prepare the Journal entry to record the sale. Complete this question by entering your answers in the tabs below. Req 1 and 2 repare the journal entry record Mills' investment in the bonds on July 1, 2024 and interest on December 31, 2024, at the effective (market) rate. Req 3 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 A View transaction list No 1 2 Date July 01, 2024 Req 4 View journal entry worksheet December 31, 2024 Cash General Journal Investment in bonds Premium on bond investment Cash Interest revenue Premium on bond investment Req 1 and 2 Req 3 > Debit 260.0 60.0 9.1 Credit 320.0 8.0 1.1
Mills Corporation acquired as a long-term Investment $260 million of 7% 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 (yleld) was 5% for bonds of similar risk and maturity. Mills paid $320.0 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 $300.0 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 $330 million. Prepare the Journal entry to record the sale. Complete this question by entering your answers in the tabs below. Req 1 and 2 repare the journal entry record Mills' investment in the bonds on July 1, 2024 and interest on December 31, 2024, at the effective (market) rate. Req 3 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 A View transaction list No 1 2 Date July 01, 2024 Req 4 View journal entry worksheet December 31, 2024 Cash General Journal Investment in bonds Premium on bond investment Cash Interest revenue Premium on bond investment Req 1 and 2 Req 3 > Debit 260.0 60.0 9.1 Credit 320.0 8.0 1.1
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Note:-
- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
- Answer completely.
- You will get up vote for sure.
Transcribed Image Text:Mills Corporation acquired as a long-term Investment $260 million of 7% 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 (yleld) was 5% for bonds of similar risk and
maturity. Mills paid $320.0 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 $300.0 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 $330 million. Prepare the journal entry to record the sale.
Complete this question by entering your answers in the tabs below.
Req 1 and 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.
Req 3
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 lessA
View transaction list
No
1
2
Date
July 01, 2024
Req 4
View journal entry worksheet
December 31,
2024
Cash
General Journal
Investment in bonds
Premium on bond investment
Cash
Interest revenue
Premium on bond investment
* Req 1 and 2
Req 3 >
Debit
260.0
60.0
9.1
Credit
320.0
8.0
1.1
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education