Tanner-UNF Corporation acquired as an investment $220 million of 6% bonds, dated July 1, on July 1, 2024. 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 $190 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 $200 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 $180 million. Prepare the journal entries required on the date of sale. Complete this question by entering your answers in the tabs below. Req 1 and 2 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 $180 million. Prepare the journal entries required on the date of 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 View transaction list i i Req 3 No 1 2 Req 4 View journal entry worksheet January 02, 2025 Cash Date January 02, 2025 Loss on investment (unrealized, NI) Fair value adjustment General Journal Dieppunt hond inuentant Debit 20.0 180.0 Credit 20.0 ******* ********
Tanner-UNF Corporation acquired as an investment $220 million of 6% bonds, dated July 1, on July 1, 2024. 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 $190 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 $200 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 $180 million. Prepare the journal entries required on the date of sale. Complete this question by entering your answers in the tabs below. Req 1 and 2 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 $180 million. Prepare the journal entries required on the date of 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 View transaction list i i Req 3 No 1 2 Req 4 View journal entry worksheet January 02, 2025 Cash Date January 02, 2025 Loss on investment (unrealized, NI) Fair value adjustment General Journal Dieppunt hond inuentant Debit 20.0 180.0 Credit 20.0 ******* ********
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
3
Transcribed Image Text:Tanner-UNF Corporation acquired as an investment $220 million of 6% bonds, dated July 1, on July 1, 2024. 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
$190 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 $200 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 $180 million. Prepare the journal entries required on the date of sale.
Complete this question by entering your answers in the tabs below.
Req 1 and 2
Req 3
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 $180 million. Prepare the journal entries required on the date of 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
View transaction list
No
1
2
Req 4
View journal entry worksheet
January 02, 2025 Cash
Date
January 02, 2025 Loss on investment (unrealized, NI)
Fair value adjustment
General Journal
Diammunt on hand investment
Debit
20.0
180.0
Credit
20.0
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