Tanner-UNF Corporation acquired as an investment $250 million of 6% bonds, dated July 1, on July 1, 2021. Company management is holding the bonds in its trading portfolio. 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, 2021, was $210 million. Required: 1. & 2. Prepare the journal entry to record Tanner-UNFs 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 Moodys bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2022, for $190 million. Prepare the journal entries required on the date of sale.

journal entries can only be labelled as follows:

No journal entry required

Cash

Discount on bond investment

Fair value adjustment

Gain on investment (NI)

Gain on investment (unrealized, NI)

Gain on investment (unrealized, OCI)

Insurance expense

Interest receivable

Interest revenue

Investment in bonds

Loss on investment (NI)

Loss on investment (unrealized, NI)

Loss on investment (unrealized, OCI)

Premium on bond investment

Retained earnings