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Exercise 12-2 (Algo) Securities held-to-maturity; bond investment; effective interest, premium (L012-1) Mills Corporation acquired as a long-term investment $240 million of 7% bonds, dated July

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Exercise 12-2 (Algo) Securities held-to-maturity; bond investment; effective interest, premium (L012-1) Mills Corporation acquired as a long-term investment $240 million of 7% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (vield) was 5% for bonds of similar risk and maturity. Mills paid $280.0 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, 2021, was $260.0 million Required: 1. & 2. Prepare the journal entry to record Mills'investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate. 3. At what amount will Mills report its investment in the December 31, 2021, balance sheet? 4. Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mils decided to sell the investment on January 2. 2022 for $290 million. Prepare the journal entry to record the sale. Complete this question by entering your answers in the tabs below. Reg 1 and 2 Reg 3 Reg4 Prepare the journal entry to record Mills Investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Enter your answers in millions rounded to 1 decimal place. (.e., 5,500,000 should be entered as 5.5)) View transaction list Req 1 and 2 Reg 3 Req 4 Prepare the journal entry to record Mills' investment in the bonds on July 1, 2021 and interest on December 31, 2 (market) rate. (If no entry is required for a transaction/event, select "No journal entry required" in the first accou answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).) View transaction list 44 Journal entry worksheet Journal entry worksheet 2. -51:17 Prepare any journal entry needed to adjust the investment to fair value. ok Note: Enter debits before credits. Date January 02, 2022 General Journal Debit Credit Record entry Clear entry View general Journal

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