ACCOUNTS AVAILABLE FOR THIS ASSIGNMENT...
Tanner-UNF Corporation acquired as an investment $290 million of 8% bonds, dated July 1, on July 1, 2021. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 10% for bonds of similar risk and maturity. Tanner-UNF paid $260 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, 2021, was $270 million. Required: 1. & 2. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate. 3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2021, balance sheet. 4. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2022, for $250 million. Prepare the journal entries required on the date of sale. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Req 4 Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective market) rate. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place, (1.e., 5,500,000 should be entered as 5.5).) View transaction list Journal entry worksheet 1 2 > Record Tanner-UNF's Investment in the bonds on July 1, 2021. Note: Enter debits before credits Date General Journal Debit Credit July 01, 2021 Record entry Clear entry View general journal Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Req 4 Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective market) rate. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).) View transaction list Journal entry worksheet Record interest on December 31, 2021. Note: Enter debits before credits. General Journal Debit Credit Date December 31, 2021 Record entry Clear entry View general journal Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Reg 4 Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2021, balance sheet. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).) View transaction list Journal entry worksheet 1 > Record any adjustment necessary to report the bond investment in the December 31, 2021 balance sheet. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2021 Record entry Clear entry View general journal Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 4 Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2022, for $250 million. Prepare the journal entrles required on the date of sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).) Show less View transaction list Journal entry worksheet Prepare any journal entry needed to adjust the investment to fair value. Note: Enter debits before credits. Date General Journal Debit Credit January 02, 2022 Record entry Clear entry Vlew general Journal No journal entry required Cash Discount on bond investment Gain on investment (NI) Gain on investment (unrealized, NI) Gain on investment (unrealized, OCI) Insurance expense Interest receivable Interest revenue Investment in bonds Loss on investment (NI) Loss on investment (unrealized, NI) Loss on investment (unrealized, OCI) Premium on bond investment Retained earnings
