Tanner-UNF Corporation acquired as a long-term Investment $300 million of 7% bonds, dated July 1, on July 1, 2021. Company management has classified the bonds as an available-for-sale Investment. The market Interest rate yleld) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $280 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, 2021, was $285 million. Required: 1. & 2. Prepare the journal entry to record Tanner-UNF's Investment in the bonds on July 1, 2021 and interest on December 31, 2021. at the effective (market) rate. 3. Prepare any additional Journal entry necessary for Tanner-UNF to report its Investment in the December 31, 2021, 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, 2022, for $260 million. Prepare the journal entries necessary to record the sale. Including updating the falr-value adjustment, recording any reclassification adjustment, and recording 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, 2021 and interest on December 31, 2021, 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 View journal entry worksheet NO Date General Journal Debit Credit July 01, 2021 Investment in bonds 300.0 Discount on bond investment 20.0 Cash 280.0 December 31 2021 Cash 10.5 Discount on bond investment 0.9 Interest revenue 11.4 Req 1 and 2 Reg 3 Reg 4 Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2021, 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 View journal entry worksheet No General Journal Debit Credit Date December 31 2021 1 Fair value adjustment 19.1 Gain on investment (unrealized. NI) 19.1 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, 2022, for $250 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 View transaction list View journal entry worksheet NO Debit Credit 3 260.0 Date General Journal January 02, 2022 Cash Discount on bond investment Loss on investment (NI) Investment in bonds 19.1 20.9 300.0
