Mills Corporation acquired as an investment $240 million of 8% bonds, dated July 1, on July 1, 2024. Company managementholding the bonds in its trading portfolio. The market interest rate (yield) was 6% for bonds of similar risk and maturity. Millspaid $280 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result ofchanging market conditions, the fair value of the bonds at December 31, 2024, was $265 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. Prepare the journal entry by Mills to record any fair value adjustment necessary for the year ended December 31, 2024.4. Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment onJanuary 2, 2025, for $292 million. Prepare the journal entries required on the date of sale.Complete this question by entering your answers in the tabs below.Req 1 and 2Req 3Req 4Prepare the journal entry to record Mills' investment in the bonds on July 1, 2024 and interest on December 31, 2024, at the effectiv(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 as 5.5).Show lesView transaction listJournal entry worksheet<12Record Mills' investment in the bonds on July 1, 2024.Note: Enter debits before credits.DateJuly 01, 2024General JournalDebitCreditRecord entryClear entryView general journal

Bonds also known as fixed income instrument, are used by governments or companies to raise money by…

Mills Corporation acquired as an investment $240 million of 8% bonc olding the bonds in its trading portfolio. The market interest rate (yie aid $280 million for the bonds. The company will receive interest se hanging market conditions, the fair value of the bonds at December Required: - & 2. Prepare the journal entry to record Mills' investment in the bom t the effective (market) rate. . Prepare the journal entry by Mills to record any fair value adjustme . Suppose Moody's bond rating agency upgraded the risk rating of th anuary 2, 2025, for $292 million. Prepare the journal entries required Complete this question by entering your answers in the tabs be

Mills Corporation acquired as an investment $240 million of 8% bonc olding the bonds in its trading portfolio. The market interest rate (yie aid $280 million for the bonds. The company will receive interest se hanging market conditions, the fair value of the bonds at December Required: - & 2. Prepare the journal entry to record Mills' investment in the bom t the effective (market) rate. . Prepare the journal entry by Mills to record any fair value adjustme . Suppose Moody's bond rating agency upgraded the risk rating of th anuary 2, 2025, for $292 million. Prepare the journal entries required Complete this question by entering your answers in the tabs be

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 16E

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Mills Corporation acquired as an investment $240 million of 8% bonds, dated July 1, on July 1, 2024. Company management
holding the bonds in its trading portfolio. The market interest rate (yield) was 6% for bonds of similar risk and maturity. Mills
paid $280 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 $265 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. Prepare the journal entry by Mills to record any fair value adjustment necessary for the year ended December 31, 2024.
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 $292 million. Prepare the journal entries required on the date of sale.
Complete this question by entering your answers in the tabs below.
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 effectiv
(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 les
View transaction list
Journal entry worksheet
<
1
2
Record Mills' investment in the bonds on July 1, 2024.
Note: Enter debits before credits.
Date
July 01, 2024
General Journal
Debit
Credit
Record entry
Clear entry
View general journal

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