TannerUNF Corporation acquired as a longterm investment $ million of bonds, dated July on July Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate yield was for bonds of similar risk and maturity. TannerUNF paid $ million for the bonds. The company will receive interest semiannually on June and December As a result of changing market conditions, the fair value of the bonds at December was $ million.
Required:
& Prepare the journal entry to record TannerUNFs investment in the bonds on July and interest on December at the effective market rate.
At what amount will TannerUNF report its investment in the December balance sheet?
Suppose Moodys bond rating agency downgraded the risk rating of the bonds motivating TannerUNF to sell the investment on January for $ million. Prepare the journal entry to record the sale.
The Journal Name Options are:
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
