Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% 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 $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, 2018, was $210 million. Required:

1. Prepare the journal entry to record Tanner-UNFs investment in the bonds on July 1, 2018.

2. Prepare the journal entries by Tanner-UNF to record 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? Why? 4. Suppose Moodys bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2019, for $190 million.Prepare the journal entry to record the sale.