Mills Corporation acquired as a long-term investment $260 million of 6% bonds, dated July 1, on July 1, 2018. Company management has positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Mills paid $300.0 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, 2018, was $280.0 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 Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2019, for $314 million. Prepare the journal entry to record the sale. Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Reg 4 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. (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 Event General Journal Debit Credit 1 1 Investment in bonds Premium on bond investment Cash 260.0 60.0 % 300.0 2 2 7.8 Cash Premium on bond investment Interest revenue Req 1 and 2 Req3 > Mills Corporation acquired as a long-term investment $260 million of 6% bonds, dated July 1, on July 1, 2018. Company management has positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Mills paid $300.0 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, 2018, was $280.0 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 Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2019, for $314 million. Prepare the journal entry to record the sale. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Req 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 million
