Mills Corporation acquired as a long-term investment $225 million of 8% 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 (yield) was 6% for bonds of similar risk and maturity. Mills paid $250.0 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 $240.0 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 Moodys bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2022, for $266 million. Prepare the journal entry to record the sale.

Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price, and holds these investments in its trading portfolio. The companys fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lears trading account occurred during December 2021 and the first week of 2022.

2021
Dec.		17		Purchased 120 Grocers Supply Corporation bonds at par for $420,000.
		28		Received interest of $2,800 from the Grocers Supply Corporation bonds.
		31		Recorded any necessary adjusting entry relating to the Grocers Supply Corporation bonds. The market price of the bond was $4,000 per bond.
2022
Jan.		5		Sold the Grocers' Supply Corporation bonds for $450,000.

Required: 1. Prepare the appropriate journal entry or entries for each transaction. 2. Indicate any amounts that Rantzow-Lear Company would report in its 2021 balance sheet and income statement as a result of this investment.