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Mills Corporation acquired as a long-term investment $250 million of 8% bonds, dated July 1, on July 1, 2021. Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 6% for bonds of similar risk and maturity. Mills paid $290 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 $270 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 Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2022, for $300 million. Prepare the journal entries required on the date of sale.

Mills Corporation acquired as a long-term investment $250 million of 8% bonds, dated July 1, on July 1, 2021. Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 6% for bonds of similar risk and maturity. Mills paid $290 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 $270 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 Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2022, for $300 million. Prepare the journal entries required on the date of sale.

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
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Mills Corporation acquired as a long-term investment $250 million of 8% bonds, dated July 1, on July 1, 2021. Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 6% for bonds of similar risk and maturity. Mills paid $290 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 $270 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 Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2022, for $300 million. Prepare the journal entries required on the date of sale.

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Hi it says wrong. I had 288.7 also but idk please give formula

SCC Fa22 ACCT 104 LEC 17842 C X Question 1- CH 12 practice prob X C Mills Corporation acquired as a lc X b Answered: Mills Corporation acqu X + ✰ ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Flms.mheducation.com%252Fmghmiddleware%252Fmheproducts%252FlmsC... L CH 12 practice problem 83°F Sunny 1 Mc Graw Hill Complete this question by entering your answers in the tabs below. Req 1 and 2 No 1 Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. 3 Req 3 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 $300 million. Prepare the journal entries required on the date of 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).) Date January 02, 2022 January 02, 2022 Req 4 Cash Answer is not complete. General Journal Fair value adjustment Gain on investment (unrealized, NI) Gain on investment (NI) Premium on bond investment Investment in bonds Saved < Req 3 H Req 4 > < Prev >> ♥ ✔ ✓ 1 of 1 H Debit 30.0✔ 300.0 Credit Show less Next > 30.0✔ 11.3✓ 38.7✔ 250.0✔ Help Save & Exit Submit Return to question 7:16 PM 9/16/2022 X :
Transcribed Image Text:SCC Fa22 ACCT 104 LEC 17842 C X Question 1- CH 12 practice prob X C Mills Corporation acquired as a lc X b Answered: Mills Corporation acqu X + ✰ ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Flms.mheducation.com%252Fmghmiddleware%252Fmheproducts%252FlmsC... L CH 12 practice problem 83°F Sunny 1 Mc Graw Hill Complete this question by entering your answers in the tabs below. Req 1 and 2 No 1 Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. 3 Req 3 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 $300 million. Prepare the journal entries required on the date of 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).) Date January 02, 2022 January 02, 2022 Req 4 Cash Answer is not complete. General Journal Fair value adjustment Gain on investment (unrealized, NI) Gain on investment (NI) Premium on bond investment Investment in bonds Saved < Req 3 H Req 4 > < Prev >> ♥ ✔ ✓ 1 of 1 H Debit 30.0✔ 300.0 Credit Show less Next > 30.0✔ 11.3✓ 38.7✔ 250.0✔ Help Save & Exit Submit Return to question 7:16 PM 9/16/2022 X :
SCC Fa22 ACCT 104 LEC 17842 C X Question 1- CH 12 practice prob X C Mills Corporation acquired as a lc X b Answered: Mills Corporation acqu X + ✰ ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Flms.mheducation.com%252Fmghmiddleware%252Fmheproducts%252FlmsC... L CH 12 practice problem 83°F Sunny Mc Graw Hill 1 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 Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2022, for $300 million. Prepare the journal entries required on the date of sale. Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Saved X Answer is not complete. At what amount will Mills report its investment in the December 31, 2021, balance sheet? Investment $ 288 million < Req 1 and 2 Req 4 > < Prev 1 of 1 H — Help Next > Save & Exit Submit Return to question 7:16 PM 9/16/2022 X :
Transcribed Image Text:SCC Fa22 ACCT 104 LEC 17842 C X Question 1- CH 12 practice prob X C Mills Corporation acquired as a lc X b Answered: Mills Corporation acqu X + ✰ ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Flms.mheducation.com%252Fmghmiddleware%252Fmheproducts%252FlmsC... L CH 12 practice problem 83°F Sunny Mc Graw Hill 1 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 Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2022, for $300 million. Prepare the journal entries required on the date of sale. Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Saved X Answer is not complete. At what amount will Mills report its investment in the December 31, 2021, balance sheet? Investment $ 288 million < Req 1 and 2 Req 4 > < Prev 1 of 1 H — Help Next > Save & Exit Submit Return to question 7:16 PM 9/16/2022 X :
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