[This is a variation of E 12-2 focusing on available-for-sale securities.] Mills Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2018 Company management has the 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 $280 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 $270 million Required: 1. Prepare the journal entry to record Mills' investment in the bonds on July 1, 2018 2. Prepare the journal entries by Mills to record 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? Why? 4. Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the le 4 investment on January 2, 2019, for $290 million. Prepare the journal entry to record the sale. Colah Company purchased $1 million of Jackson, Inc., 5% bonds at par on July 1, 2018, with interest paid semi- annually. Colah determined that it should account for the bonds as an available-for-sale investment. At December 31, 2018, the Jackson bonds had a fair value of $1.2 million. Colah sold the Jackson bonds on July 1, 2019 for ale 4 $900,000. Required: I. Prepare Colah's journal entries to record: a. The purchase of the Jackson bonds on July1 b. Interest revenue for the last half of 2018 Any year-end 2018 adjusting entries d. Interest revenue for the first half of 2019 e. Any entries necessary upon sale of the Jackson bonds on July 1, 2019, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale Fill out the following table to show the effect of the Jackson bonds on Colah's net income, other comprehen- sive income, and comprehensive income for 2018, 2019, and cumulatively over 201 2. 8 and 2019 2018 2019 Total Net Income oci Comprehensive Income