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 (yield) 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 Moodys bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2022, for $290 million. Prepare the journal entry to record the sale.

Req 1 and 2 Req3 Req 4 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, (i.e., 5,500,000 should be entered as 5.5).) No Date General Journal Debit Credit 1 July 01, 2021 Investment in bonds 240.0 Premium on bond investment Cash >>> 40.0 280.0 N December 31, 2021 Cash 8.4 Premium on bond investment > >> 7.0 X 1.4 X Interest revenue Req 1 and 2 Reg 3 Reg 4 At what amount will Mills report its investment in the December 31, 2021, balance sheet? (Enter your answer in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).) Investment $ 278.6 million Req 1 and 2 Reg 3 Reg 4 Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2022, for $290 million. Prepare the journal entry to record the sale. (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, (i.e., 5,500,000 should be entered as 5.5).) Show less No Date General Journal Debit Credit 1 January 02, 2022 Cash 290 Investment in bonds 240 Premium on bond investment 38 X Gain on investments (NI) 12 X