Tanner$-$UNF Corporation acquired as a long$-$term investment $$200$ million of $6\%$ bonds, dated July $1,$ on July $1,2024.$ Company

management has the positive intent and ability to hold the bonds until maturity. Tanner$-$UNF paid $$200$ 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 $31,2024,$ was $$210$ million.

Required:

& $2.$ Prepare the journal entry to record Tanner$-$UNF's investment in the bonds on July $1,2024$ and interest on December $31,2024,$

at the effective $($market$)$ rate.

$3$a$.$ Prepare the journal entry, if needed, to record the fair value adjustment at December $31.$

$3$b$.$ At what amount will Tanner$-$UNF report its investment in the December $31,2024,$ balance sheet?

Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner$-$UNF to sell the investment on

January $2,2025,$ for $$190$ million. Prepare the journal entry to record the sale.

Complete this question by entering your answers in the tabs below.

Prepare the journal entry, if needed, to record the fair value adjustment at December $31.$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Enter your answers in

millions $($i$.$e$.,5,000,000$ should be entered as $5).$

Journal entry worksheet

$1$

Record the fair value adjustment at December $31.$

Note: Enter debits before credits.