Item1 4 points Return to questionItem 1 Exercise 12-1 (Algo) Securities held-to-maturity; bond investment; effective interest, discount [LO12-1] Tanner-UNF Corporation acquired as a long-term investment $340 million of 6.0% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 9% for bonds of similar risk and maturity. Tanner-UNF paid $300.0 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 $320.0 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. At what amount will Tanner-UNF 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 $300.0 million. Prepare the journal entry to record the sale.

Complete this question by entering your answers in the tabs below.

Req 1 and 2

Req 3

Req 4

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. (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).)

No	Date	General Journal	Debit	Credit
1	July 01, 2021	Investment in bondsselected answer correct	340.0selected answer correct	not attempted
		Cashselected answer correct	not attempted	340.0selected answer incorrect
		Discount on bond investmentselected answer correct	40.0selected answer incorrect	not attempted

At what amount will Tanner-UNF report its investment in the December 31, 2021, balance sheet? (Enter your answer in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).)

Investment

not attempted

million

Suppose Moodys bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2022, for $300.0 million. Prepare the journal entry to record 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).)

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Journal entry worksheet

Record the sale.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
January 02, 2022

No journal entry required

Cash

Discount on bond investment

Gain on investments (NI)

Insurance expense

Interest receivable

Interest revenue

Investment in bonds

Loss on investments (NI)

Premium on bond investment

Retained earnings