Exercise 12-1 Securities held-to-maturity; bond investment; effective interest, discount [L012-1] Tanner-UNF Corporation acquired as a long-term investment $280 million of 6.0% 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 8% for bonds of similar risk and maturity. Tanner-UNF paid $250.0 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 $260.0 million Required 1. & 2. Prepare the journal entry to record Tanner-UNFs investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate. 3. At what amount will Tanner-UNF report its investment in the December 31, 2018, 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, 2019, for $240.0 million. Prepare the journal entry to record the sale. Complete this question by entering your answers in the tabs below Req 1 and 2Req 3 Req 4 Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2018 and interest on December 31, 2018, 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 2 decimal places, (i.e., 5,500,000 should be entered as 5.50).) View transaction list Journal entry worksheet 2 Record Tanner-UNF's investment in the bonds on July 1, 2018. Note: Enter debits before credits. Event General Journal Debit Credit No journal entry required Accounts payable Accounts receivable Accumulated depreciation Record v general journal Req 1 and 2 Req 3 Req 4 At what amount will Tanner-UNF report its investment in the December 31, 2018, balance sheet? (Enter your answer in millions rounded to 2 decimal places, (i.e., 5,500,000 should be entered as 5.50).) Investment million Req 1 and 2 Req 1 and 2 Req 3 Req 4 Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2019, for $240.0 million. Prepare the journal entry to record the 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 2 decimal places (i.e., 5,500,000 should be entered as 5.50).) Show lessA View transaction list Journal entry worksheet Record the sale of the investment by Tanner-UNF. Note: Enter debits before credits. Credit Event General Journal Debit Clear entry Record entry View general journal
