Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Tanner-UNF Corporation acquired as a long-term investment $280 million of 6% bonds, dated July 1 , on July 1,2024 . Company management has classified the

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Tanner-UNF Corporation acquired as a long-term investment $280 million of 6% bonds, dated July 1 , on July 1,2024 . Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $240 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 $250 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. Prepare any additional journal entry necessary for Tanner-UNF to 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 $230 million. Prepare the journal entries necessary to record the sale, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale. Complete this question by entering your answers in the tabs below. 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. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5). Show lessa 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. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5). Show less 1 Journal entry worksheet Record Tanner-UNF's investment in the bonds on July 1, 2024. Note: Enter debits before credits. 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. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5). Show less 4 Journal entry worksheet Note: Enter debits before credits. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31,2024 , balance sheet. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5). Journal entry worksheet Record the entry for fair value adjustment. Note: Enter debits before credits. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2 2, 2025, for $230 million. Prepare the journal entries necessary to record the sale, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5). Show less a Journal entry worksheet Record the entry for fair-value adjustment, AFS investment. Note: Enter debits before credits. 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 $230 million. Prepare the journal entries necessary to record the sale, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5). Show less a Journal entry worksheet Record the entry for reclassification adjustment. Note: Enter debits before credits. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2 2, 2025, for $230 million. Prepare the journal entries necessary to record the sale, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5). Show less 4 Journal entry worksheet Record the sale of the investment by Tanner-UNF. Note: Enter debits before credits

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

QuickBooks Step-by-Step Guide To Bookkeeping And Accounting For Beginners

Authors: Kevin Ellis

1st Edition

1951345126, 978-1951345129

More Books

Students also viewed these Accounting questions

Question

Find the transfer function Z(s)X(s) for the system shown in Figure.

Answered: 1 week ago

Question

Define Decision making

Answered: 1 week ago

Question

What are the major social responsibilities of business managers ?

Answered: 1 week ago

Question

What are the skills of management ?

Answered: 1 week ago

Question

What would you do?

Answered: 1 week ago