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Exercise 12-1 (Algo) Securltles held-to-maturlty; bond Investment; effective Interest, discount [LO12-1] Tanner-UNF Corporation acquired as a long-term investment $270 million of 8.0% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 10% for bonds of similar risk and maturity. Tanner-UNF paid $240.0 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, 2021, was $250.0 million. Requlred: 1. & 2. Prepare the joumal 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. At what amount will Tanner-UNF 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 $230.0 million. Prepare the journal entry to record the sale. Complete this question by entering your answers in the tabs below. Reg 1 and 2 Req 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 list Journal entry worksheet Record Tanner-UNF's investment in the bonds on July 1, 2021. Note: Enter debits before credits. General Journal Date Debit Credit July 01, 2021 Record entry Clear entry View general journal Journal entry worksheet Record interest on December 31, 2021. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2021 Record entry Clear entry View general journal Req 1 and 2 Req 3 > Reg 1 and 2 Reg 3 Reg 4 At what amount will Tanner-UNF report its investment in the December 31, 2021, balance sheet? (Enter your answer in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).) million Investment Req 3 Reg 1 and 2 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 $230.0 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 ansvers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Show less a 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 View general journal 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, 2022, for $230.0 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 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Show less a View transaction list Journal entry worksheet Record the sale. Note: Enter debits before credits. Date General Journal Debit Credit January 02, 2022 Record entry Clear entry View general journal
