Mills Corporation acquired as an investment $$220$ million of $6\%$ bonds, dated July $1,$ on July $1,2024.$ Company management is holding the bonds in its trading portfolio. The market interest rate $($yield$)$ was $4\%$ for bonds of similar risk and maturity. Mills paid $$260$ 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 $$240$ 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.

Prepare the journal entry by Mills to record any fair value adjustment necessary for the year ended December $31,2024.$

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 $$272$ million. Prepare the journal entries required on the date of sale.

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Req $1$ and $2$

Req $3$

Req $4$

Prepare the journal entry by Mills to record any fair value adjustment necessary for the year ended December $31,2024.$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Do not round