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Mills Corporation acquired as a long$-$term investment $$290$ million of $8\%$ bonds, dated July $1,$ on July $1,2024.$ Company management Journal entry worksheet

Record the fair$-$value adjustment.

Note: Enter debits before credits. Journal entry worksheet

Record any reclassification adjustment.

Note: Enter debits before credits. Journal entry worksheet

$1$

$2$

$3$

Record the sale of the investment by Mills.

Note: Enter debits before credits.

$\backslash$table$[[$Date$,$General Journal,Debit,Credit$],[$January $02,2025,$Cash,$350\mathrm{.}0,],[,$Gain on investment $($NI$),,],[,$Investment in bonds,,$],[,,,],[,,,]]$

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 $$340$ 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 $$330$ 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.

At what amount will Mills report its investment in the December $31,2024,$ balance sheet?

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 $$350$ million. Prepare the journal entries required on the date of sale.

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