Mills Corporation acquired as a long-term investment $260 million of 7% bonds, dated July 1, on July 1, 2018. Mills determined that it should account for the bonds as an available-for-sale investment. The market interest rate (yield) was 5% for bonds of similar risk and maturity. Mills paid $320 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, 2018, was $300 million. Required: 1. & 2. Prepare the journal entry to record Mills investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate. 3. At what amount will Mills report its investment in the December 31, 2018, 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, 2019, for $330 million. Prepare the journal entries to record the sale.

Req 1 and 2 Req 3 Reg 4 At what amount will Mills report its investment in the December 31, 2018, balance sheet? (Enter your answer in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).) Investment $ 319 X million Req 1 and 2 Req3 Req 4 Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2019, for $330 million. Prepare the journal entries 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 Event General Journal Credit Debit 60.0 X 1 Fair value adjustment Unrealized holding gainOCI 60.0 % - 11.1 Reclassification adjustment-OCI Fair value adjustment 11.1 3 2 330.0 Cash Gain on sale of investments Premium on bond investment Investment in bonds 11.1 58.9 260.0