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Mills Corporation acquired as a long-term investment $260 million of 7% 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 5% for bonds of similar risk and maturity Mills paid $320 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 million Required: 1.4 2. Prepare the journal entry to record Mils' 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 entries required on the date of sale

Mills Corporation acquired as a long-term investment $260 million of 7% 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 5% for bonds of similar risk and maturity Mills paid $320 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 million Required: 1.4 2. Prepare the journal entry to record Mils' 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 entries required on the date of sale

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Mills Corporation acquired as a long-term investment $260 million of 7% 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 5% for bonds of similar risk and maturity. Mills paid $320 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 million Required: 1. & 2. Prepare the journal entry to record Mils 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 entries required on the date of sale Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1 and 2 Rey 4 O At what amount will Mils 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, (.e, 5,500,000 should be entered as 5.5). 330 million Req3
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 classified the bonds as an available for sale investment. The market interest rate (yield) was 5% for bonds of similar risk and maturity. Mills paid $320 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 million Required: 1. & 2. Prepare the journal entry to record Mils 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 entries required on the date of sale Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1 and 2 Rey 4 O At what amount will Mils 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, (.e, 5,500,000 should be entered as 5.5). 330 million Req3
ressure eve 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 milion. Prepare the journal entries required on the date of sale Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 No Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Miis decided to sell the investment on January 2, 2025, for $330 milion. Prepare the journal entries required on the date of 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, (ie, 5,500,000 should be entered as 5.5). Show less Reg 4 Date January 02, 2025 Cash General Journal Investment in bonds Premium on bond investment Retained eamings (Req3 R4 Debit 330.0 Credit 260.0 59 11:
Transcribed Image Text:ressure eve 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 milion. Prepare the journal entries required on the date of sale Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 No Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Miis decided to sell the investment on January 2, 2025, for $330 milion. Prepare the journal entries required on the date of 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, (ie, 5,500,000 should be entered as 5.5). Show less Reg 4 Date January 02, 2025 Cash General Journal Investment in bonds Premium on bond investment Retained eamings (Req3 R4 Debit 330.0 Credit 260.0 59 11:
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