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 $($yield$)$ was $5\%$ for bonds of

similar risk and maturity. Mills paid $$320\mathrm{.}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\mathrm{.}0$ million.

Required:

& $2.$ 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.

At what amount will Mills report its investment in the December $31,2024,$ balance sheet?

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.

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 $5\mathrm{.}5).$

Journal entry worksheet

$2$

Record Mill's investment in the bonds on July $1,2024.$

Note: Enter debits before credits.Mills Corporation acquired as a long$-$term investment $$260$ million of $7\%$ bonds, dated July $1,$ on July $1,2024.$ Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate $($yield$)$ was $5\%$ for bonds of similar risk and maturity. Mills paid $$320\mathrm{.}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\mathrm{.}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.