1. Mills Corporation acquired as an investment $200 million of 7% bonds, dated July 1, on July 1, 2021. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 5% for bonds of similar risk and maturity. Mills paid $240 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, 2021, was $210 million.

Journal Entry

Dec 31- Prepare any journal entry needed to adjust the investment to fair value

January 02- Prepare any journal entry needed to adjust the investment to fair value

January 02-Record the sale of investment by Mills