Question

Bonds to account for purchase and for discret.-Ro ant 37.2 Assignment View Award: 166 points Mills Corporation acquired as a long term istment 240 million of should account for the bonds as an available for sale investment. The market interest ont $240 million of 6% bonds. dated July 1. on July 1, 2018. Mills determined that it bonds, dated Jy o r bonds of sin maturity. Mills paid $280 million for the bonds. The company will receive interes of changing market conditions, the fair value of the bonds December 31, 2018, was mpany will receive interest semiannually on June 30 and December 31. As a res Required: 1. & 2. Prepare the journal entry to record Mills effective markt entry to record Mills'investment in the bonds on July 1. 2018 and interest on December 31, 2018, at the 3. At what amount will Mills report its investment in the December 31, 2018, balance sheet? suppose Moody's bond rating agency ungraded the risk ratio of the bends and Muls decided to sell the investment on January 2 2019, for $290 million. Prepare the journal entries to record the sale Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 4 At what amount will Mills report its investment in the December 31, 2018, balance sheet? (Enter your answer in millor rounded to 1 decimal place. (.e., 5.500,000 should be entered as 5.5).) Investment million < Req 1 and 2 Reg 4 > rov 09_13_2017_OC_CS-98539, 09_21_2017_QC_CS-100264. 11_21_2017_OC_CS-109973.09_10_2019 00 CS-17 References 280-240-40) General Journal Learning Objective: 12-01 Describe the key characteristics of a debt investment and demonstrate

Answer 1

Date		Debit	Credit
July 1	Available for Sale Bonds	280,000,000
	Cash		280,000,000
To record Purchase of Bonds at market Value
Dec 31	Cash	7,200,000
	Loss on Available for Sale Bonds (Recorded in other comprehensive income/loss )	7,600,000
	Interest Income		4,800,000
	Available for Sale Bonds		10,000,000
To record interest income and Adjust of Bonds Price to Market Value

2)The Investment reported by the Mills on Dec 31 2018 would be At fair Market Value that is 270 millions

3)

Date		Debit	Credit
Jan 2,2019	Cash	290,000,000
	Available for sale Bonds		270,000,000
	Loss on Available for Sale Bonds (Recorded in other comprehensive income )		7,600,000
	Realized gain on Available For Sales -Bonds		12,400,000

Note: The gain is realized here and Unrealized loss as been credited to make it Zero