Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. [this is a variation of e 12-2 focusing on availab

[This is a variation of E 12-2 focusing on available-for-sale securities.] Mills Corporation acquired as...

60.1K

Verified Solution

Question

Accounting

image

[This is a variation of E 12-2 focusing on available-for-sale securities.] Mills Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2018. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Mills paid $280 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, 2018, was $270 million. Required: 1. Prepare the journal entry to record Mills' investment in the bonds on July 1, 2018. 2. Prepare the journal entries by Mills to record interest on December 31, 2018, at the effective (market) rate. 3. At what amount will Mills report its investment in the December 31, 2018, balance sheet? Why? 4. Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2019, for $290 million. Prepare the journal entry to record the sale

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Basic Math
1.2K views

Let x be a random variable that represents the level of glucose in the blood (milligrams...

Civil Engineering
1.2K views

Assume you are conducting a parking study in your University. You need to explain the processes/tasks...

Mechanical Engineering
1.2K views

e are choosing material for a round rod. The material must be a metal or alloy....

Biology
1.2K views

Homeostasis is the maintenance of nearly constant conditions in the cells of an organism. Which...

Physics
1.2K views

There are two plane mirrors They are mutually inclined S is a source emitting light...

Basic Math
1.2K views

soil water content and the spread of the disease in fields of bell It is...

Calculus
1.2K views

Kim is trying to decide whether she can afford a loan she needs in order...

Algebra
1.2K views

a Find the equation of the cross section of the mirror if the vertex is...

Accounting
1.2K views

You are working for Mindak LLP, an accounting consulting firm, as a research and accounting...

Accounting
1.2K views

If you borrow $2,700 and agree to repay the loan in four equal annual payments...

Accounting
1.2K views

Using the information circled in the below image, solve for the Rent - Downtown office:...

Finance
1.2K views

Tho cument zerb-coipon yield cune for fisk-free beads is as follows What is the risk...