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Exercise 12-10 (Algo) Available-for-sale securities [LO12-1, 12-4] Tanner-UNF Corporation acquired as a long-term Investment $250 million of 8% bonds, dated July 1, on July 1, 2021. Company management has classified the bonds as an available-for-sale Investment. The market Interest rate (yleld) was 10% for bonds of similar risk and maturity. Tanner-UNF paid $210 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 $220 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 $200 million. Prepare the journal entries necessary to record the sale. Including updating the falr-value adjustment, recording any reclassification adjustment, and recording the sale. Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 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 lat Journal entry worksheet Record Tanner-UNF's investment in the bonds on July 1, 2021. Note: Enter debits before credits General Journal Debit Credit Date July 01, 2021 Record entry Clear entry View general Journal Reg 1 and 2 Req3 > 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 Req 1 and 2 Req3 > Req 1 and 2 Reg 3 Red 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 lat Journal entry worksheet Record the entry for fair value adjustment. Note: Enter debits before credits General Journal Debit Credit Date December 31 2021 Record entry Clear entry View general Journal Req 1 and 2 Req4 > 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 $200 million. Prepare the journal entries necessary to record the sale, including updating the fair-value adjustment, recording any reclassification adjustment, and recording 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 1 decimal place, i.e., 5,500,000 should be entered as 5.5).) Show less View transaction lat Journal entry worksheet Record the entry for fair-value adjustment, AFS investment. Note: Enter debits before credits Date General Journal Debit Credit January 02, 2022 Record entry Clear entry View general Journal Journal entry worksheet Record the entry for reclassification adjustment. Note: Enter debits before credits General Journal Debit Credit Date January 02, 2022 Record entry Clear entry View general Journal
