Business, 27.01.2021 20:00 galaxychild101

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:
a. 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.
b. At what amount will Mills report its investment in the December 31, 2021, balance sheet?
c. 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 entry to record the sale.

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Mills Corporation acquired as a long-term investment $250 million of 8% bonds, dated July 1, on July...

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