Mills Corporation acquired as a long-term investment $260 million of 5% bonds, dated July 1, on...

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Solution 1&2:

Journal Entries - Mills Corporation
Event	Date	Particulars	Debit (In Million)	Credit (In Million)
1	1-Jul-18	Investment in Bond Dr	$260.00
		Premium on bond investment Dr	$40.00
		To Cash		$300.00
		(Being investment in bond recorded)

2	31-Dec-18	Cash Dr ($260 * 5% * 6/12)	$6.50
		To Premium on bond investment		$2.00
		To Interest revenue ($3003%6/12)		$4.50
		(Being revenue recognition for bond interest and premium amortized)

Solution 3:

Mills report its investment in December 31, 2018 balance sheet at amortized cost i.e. = $300 - $2 =$298 million

Solution 4:

Journal Entries - Mills Corporation
Event	Date	Particulars	Debit (In Million)	Credit (In Million)
1	2-Jan-19	Cash Dr	$315.00
		To Investment in Bond		$260.00
		To Premium on bond investment		$38.00
		To Gain on sale of investment		$17.00
		(Being bond sold and gain recoganized)

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