Return to Exercise 12-5 Trading securities (LO12-2] Tanner-UNF Corporation acquired as a long-term investment $270 million of 8% bonds, dated July 1, on July 1, 2018. The market interest rate (yield) was 10% for bonds of similar risk and maturity. Tanner-UNF paid $230 million for the bonds. The company will receive interest semiannually on June 30 and December 31. Company management is holding the bonds in its trading portfolio As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $240 million Required: 1. & 2. 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. 3. Prepare any additional journal entry necessary for Tanner-UNF to 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 $220 million. Prepare the journal entries to record the sale. 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 1 decimal place, (le, 5,500,000 should be entered as 5.5).) No Event General Journal Credit 1 Debit 270.00 1 Investment in bonds Discount on bond investment Cash 40.0 230.0 2 2 Cash Discount on bond investment Interest revenue OOO 240.0 % 10.0 250.0 X RA Req3 > Req 1 and 2 Reg 3 Reg 4 Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, 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, (l.e., 5,500,000 should be entered as 5.5).) NO Debit Credit Event 1 1 General Journal Fair value adjustment Unrealized holding gain-NI 9.2 X 9.2 Reg 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, 2019, for $220 million. Prepare the journal entries 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, (1.0, 5,500,000 should be entered as 5.5).) Show less No Event Debit Credit 1 1 General Journal Unrealized holding gain NI Fair value adjustment ( Req3 RE Return to Exercise 12-5 Trading securities (LO12-2] Tanner-UNF Corporation acquired as a long-term investment $270 million of 8% bonds, dated July 1, on July 1, 2018. The market interest rate (yield) was 10% for bonds of similar risk and maturity. Tanner-UNF paid $230 million for the bonds. The company will receive interest semiannually on June 30 and December 31. Company management is holding the bonds in its trading portfolio As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $240 million Required: 1. & 2. 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. 3. Prepare any additional journal entry necessary for Tanner-UNF to 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 $220 million. Prepare the journal entries to record the sale. 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 1 decimal place, (le, 5,500,000 should be entered as 5.5).) No Event General Journal Credit 1 Debit 270.00 1 Investment in bonds Discount on bond investment Cash 40.0 230.0 2 2 Cash Discount on bond investment Interest revenue OOO 240.0 % 10.0 250.0 X RA Req3 > Req 1 and 2 Reg 3 Reg 4 Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, 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, (l.e., 5,500,000 should be entered as 5.5).) NO Debit Credit Event 1 1 General Journal Fair value adjustment Unrealized holding gain-NI 9.2 X 9.2 Reg 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, 2019, for $220 million. Prepare the journal entries 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, (1.0, 5,500,000 should be entered as 5.5).) Show less No Event Debit Credit 1 1 General Journal Unrealized holding gain NI Fair value adjustment ( Req3 RE