Pull-down options for Req. 4.1 are:

no journal entry required, cash, discount on bond investment, gain on investments, insurance expense, interest receivable, interest revenue, investment in bonds, loss on investments, premium on bond investment, retained earnings

Exercise 12-1 (Algo) Securities held-to-maturity, bond investment; effective interest, discount [L012-1] Tanner-UNF Corporation acquired as a long term investment $310 million of 60% 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 9% for bonds of similar risk and maturity, Tanner UNF paid $2800 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 $2900 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. At what amount will Tanner-UNF report its investment in the December 31, 2021, balance sheer? 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 $2700 million Prepare the journal entry to record the sale Answer is complete but not entirely correct. 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, (l.e., 5,500,000 should be entered as 5.5).) Show less No Date General Journal Debit Credit 1 July 01, 2021 Investment in bonds 310.0 Discount on bond investment Cash 30.0 280.0 2 93 December 31, 202 Cash Discount on bond investment 33 Interest revenue 12.6 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. 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, (ie., 5,500,000 should be entered as 5.5).) Investment 290.0 % million Req 1 and 2 Reg 3 Reg4 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 $270.0 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 No Debit Credit Date General Journal January 02, 2022 Investment in bonds Retained earnings 6.7 X 6.78 2 January 02, 2022 Cash Loss on investments (NI) Discount on bond investment Investment in bonds 270 0 13.3 26.7 3100