Answer:
1.
Dr Investment in Bonds 260
Dr Premium on Investment in Bonds 40
Cr Cash $300
2.
Dr Cash$7.8
Cr Premium on Investment in Bonds $1.8
Cr Interest Revenue $6
3.
Dr Investment in bonds $260
Dr Premium on Investment in Bonds $40
Dr Premium on investment in Bonds -$1.8
Cr Carrying Value $298.2
4.
Dr Cash $314
Dr Premium on Investment in Bonds $40
Dr Premium on investment in Bonds amortized -$1.8
Dr Investment in bonds $260
Cr Gain due to investment sale $15.8
( $260+$40-1.8)-314
Explanation:
Mills Corporation Journal Entry ( $ million)
1.
Dr Investment in Bonds 260
Dr Premium on Investment in Bonds 40
(300 -260)
Cr Cash $300
2.
Dr Cash
($260 million X 6% / 2) $7.8
Cr Premium on Investment in Bonds $1.8
Cr Interest Revenue
($300 million X 4% / 2) $6
3.
Dr Investment in bonds $260
Dr Premium on Investment in Bonds $40
Dr Premium on investment in Bonds -$1.8
Cr Carrying Value $298.2
($260+$40-$1.8
4.
Dr Cash $314
Dr Premium on Investment in Bonds $40
Dr Premium on investment in Bonds amortized -$1.8
Dr Investment in bonds $260
Cr Gain due to investment sale $15.8
( $260+$40-1.8)-314