Tanner$-$UNF Corporation acquired as a long$-$term investment $$240$ million of $6\%$ bonds, dated July $1,$ on July $1,2024.$ Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate $($yield$)$ was $8\%$ for bonds of similar risk and maturity. Tanner$-$UNF paid $$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:

$1.$ & $2.$ 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.

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

$4.$ Suppose Moody$$s bond rating agency downgraded the risk rating of the bonds motivating Tanner$-$UNF to sell the investment on January $2,2025,$ for $$190$ million. Prepare the journal entry to record the sale.

The Journal Name Options are:

No journal entry required

Cash

Discount on bond investment

Gain on investments $($NI$)$

Insurance expense

Interest receivable

Interest revenue

Investment in bonds

Loss on investments $($NI$)$

Premium on bond investment

Retained earnings