Tanner-UNF Corporation acquired as a long-term investment $160 million of 5.0% bonds, dated July 1, on July 1 2018. 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 $130.0 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, 2018, was $140.0 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. At what amount will Tanner-UNF 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 $110.0 million. Prepare the journal entry to record the sale. Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 4 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 2 decimal places, (.e., 5,500,000 should be entered as 5.50).) View transaction list Journal entry worksheet 1 2 Record Tanner-UNF's Investment in the bonds on July 1, 2018. Reg 1 and 2 Reg 3 Reg 4 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. Ente your answers in millions rounded to 2 decimal places, (i.e., 5,500,000 should be entered as 5.50).) View transaction list Journal entry worksheet Req 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 $110.0 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 2 decimal places (.e., 5,500,000 should be entered as 5.50).) Show less View transaction list Journal entry worksheet 1 Record the sale of the investment by Tanner-UNF. Note: Enter debits before credits. Event General Journal Debit Credit 1 No journal entry required Accounts payable Accounts receivable Accumulated depreciation Recorded general Journal
