Tanner-UNF Corporation acquired as a long-term investment $310 million of 6.0% bonds, dated July 1, on...

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Tanner-UNF Corporation acquired as a long-term investment $310million of 6.0% bonds, dated July 1, on July 1, 2018. Companymanagement has the positive intent and ability to hold the bondsuntil maturity. The market interest rate (yield) was 9% for bondsof similar risk and maturity. Tanner-UNF paid $280.0 million forthe bonds. The company will receive interest semiannually on June30 and December 31. As a result of changing market conditions, thefair value of the bonds at December 31, 2018, was $290.0million.

Required:
1. & 2. Prepare the journal entry to recordTanner-UNF’s investment in the bonds on July 1, 2018 and intereston December 31, 2018, at the effective (market) rate.
3. At what amount will Tanner-UNF report itsinvestment in the December 31, 2018, balance sheet?
4. Suppose Moody’s bond rating agency downgradedthe risk rating of the bonds motivating Tanner-UNF to sell theinvestment on January 2, 2019, for $270.0 million. Prepare thejournal entry to record the sale.

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Answer 1 2 In Million Date Particulars Dr Cr 1Jul18 Investment Bonds 31000 Discount on Investment Bonds Bal 3000 Cash 28000 Being See Answer

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Tanner-UNF Corporation acquired as a long-term investment $310million of 6.0% bonds, dated July 1, on July 1, 2018. Companymanagement has the positive intent and ability to hold the bondsuntil maturity. The market interest rate (yield) was 9% for bondsof similar risk and maturity. Tanner-UNF paid $280.0 million forthe bonds. The company will receive interest semiannually on June30 and December 31. As a result of changing market conditions, thefair value of the bonds at December 31, 2018, was $290.0million.Required:1. & 2. Prepare the journal entry to recordTanner-UNF’s investment in the bonds on July 1, 2018 and intereston December 31, 2018, at the effective (market) rate.3. At what amount will Tanner-UNF report itsinvestment in the December 31, 2018, balance sheet?4. Suppose Moody’s bond rating agency downgradedthe risk rating of the bonds motivating Tanner-UNF to sell theinvestment on January 2, 2019, for $270.0 million. Prepare thejournal entry to record the sale.