Tanner-UNF Corporation acquired as a long-term investment $300 million of 6% bonds, dated July 1, on July 1, 2018. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $250 million for the bonds. The company will receive interest semiannually on June 30 and December 31. Company management has classified the bonds as available-for-sale investments. As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $260 million. Required: 1. & 2. Prepare the journal entry to record Tanner-UNFs investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate. 3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, balance sheet. 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 $240 million. Prepare the journal entries necessary to record the sale, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale.

Req 1 and 2 Reg 3 Req 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 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).) View transaction list Journal entry worksheet 1 2 Record Tanner-UNF's investment in the bonds on July 1, 2018. Note: Enter debits before credits. Event General Journal Debit Credit 1 Record entry Clear entry View general journal Req 1 and 2 Reg 3 Req 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 i decimal place, i.e., 5,500,000 should be entered as 5.5).) View transaction list Journal entry worksheet Record interest on December 31, 2018. Note: Enter debits before credits. Event General Journal Debit Credit 2 Record entry Clear entry View general journal Reg 1 and 2 Reg 3 Reg 4 Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, balance sheet. (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 1 decimal place, i.e., 5,500,000 should be entered as 5.5).) View transaction list Journal entry worksheet 1 > Record the entry for fair value adjustment. Note: Enter debits before credits. Event General Journal Debit Credit 1 Record entry Clear entry View general journal Req 1 and 2 Reg 3 Req 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 $240 million. Prepare the journal entries necessary to record the sale, including updating the fair- value adjustment, recording any reclassification adjustment, and recording 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 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).) Show less Event Credit No 1 General Journal Unrealized holding loss-OCI Fair value adjustment Debit 20.0 1 >> 20.0 2 2 Cash Loss on sale of investments Discount on bond investment Investment in bonds 320.0 X 12.1 x 27.9 X 360.0 3 3 X 11.0 Fair value adjustment Reclassification adjustmentOCI 11.0