Under Required $4.,$ prepare any journal entry needed to adjust the investment to fair value. Exercise $12-1($Algo$)$ Securitles held$-$to$-$maturity; bond Investment; effective Interest, discount; financial statement effects $[$LO$12-1,12-2]$

Tanner$-$UNF Corporation acquired as a long$-$term investment $\backslash (\backslash$$ $340\backslash )$ million of $\backslash (6\mathrm{.}0\backslash \%\backslash )$ bonds, dated July $1,$ on July $1,2024.$ Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate $($yield$)$ was $\backslash (9\backslash \%\backslash )$ for bonds of similar risk and maturity. Tanner$-$UNF paid $\backslash (\backslash$$ $300\mathrm{.}0\backslash )$ 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 $\backslash (\backslash$$ $320\mathrm{.}0\backslash )$ million.

Required:

$1.\backslash$& $2.$ 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.

$3.$ At what amount will Tanner$-$UNF 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 $\backslash (\backslash$$ $300\mathrm{.}0\backslash )$ 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 $4$

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 $\backslash (\backslash$$ $300\mathrm{.}0\backslash )$ million. Prepare the journal entry to record the 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 $5\mathrm{.}5).$

Journal entry worksheet

$1$

$2$

Prepare any journal entry needed to adjust the investment to fair value.

Note: Enter debits before credits.