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In: Accounting
Tanner-UNF Corporation acquired as a long-term investment $260 million of 7% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $260 million of 7% bonds, dated July 1, on July 1, 2018. The market interest rate (yield) was 9% for bonds of similar risk and maturity. Tanner-UNF paid $220 million for the bonds. The company will receive interest semiannually on June 30 and December 31. Company management is holding the bonds in its trading portfolio. As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $230 million. Required: 1. & 2. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate. 3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, 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, 2019, for $200 million. Prepare the journal entries to record the sale.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Tanner-UNF Corporation acquired as a long-term investment $260 million of 7% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $260
million of 7% bonds, dated July 1, on July 1, 2018. The market
interest rate (yield) was 9% for bonds of similar risk and
maturity. Tanner-UNF paid $220 million for the bonds. The company
will receive interest semiannually on June 30 and December 31.
Company management has classified the bonds as available-for-sale
investments. As a result of changing market conditions, the fair
value of the bonds at December 31, 2018, was $230...
Tanner-UNF Corporation acquired as a long-term investment $260 million of 7.0% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $260
million of 7.0% bonds, dated July 1, on July 1, 2018. 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 $230.0 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...
Tanner-UNF Corporation acquired as a long-term investment $260 million of 6% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $260
million of 6% bonds, dated July 1, on July 1, 2018. The market
interest rate (yield) was 8% for bonds of similar risk and
maturity. Tanner-UNF paid $220 million for the bonds. The company
will receive interest semiannually on June 30 and December 31.
Company management is holding the bonds in its trading portfolio.
As a result of changing market conditions, the fair value of the
bonds at December 31, 2018, was...
Tanner-UNF Corporation acquired as a long-term investment $260 million of 6% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $260
million of 6% bonds, dated July 1, on July 1, 2018. The market
interest rate (yield) was 8% for bonds of similar risk and
maturity. Tanner-UNF paid $220 million for the bonds. The company
will receive interest semiannually on June 30 and December 31.
Company management is holding the bonds in its trading portfolio.
As a result of changing market conditions, the fair value of the
bonds at December 31, 2018, was...
Tanner-UNF Corporation acquired as a long-term investment $200 million of 7% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $200
million of 7% bonds, dated July 1, on July 1, 2018. The market
interest rate (yield) was 9% for bonds of similar risk and
maturity. Tanner-UNF paid $160 million for the bonds. The company
will receive interest semiannually on June 30 and December 31.
Company management is holding the bonds in its trading portfolio.
As a result of changing market conditions, the fair value of the
bonds at December 31, 2018, was...
Tanner-UNF Corporation acquired as a long-term investment $300 million of 7% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $300
million of 7% bonds, dated July 1, on July 1, 2018. The market
interest rate (yield) was 8% for bonds of similar risk and
maturity. Tanner-UNF paid $280 million for the bonds. The company
will receive interest semiannually on June 30 and December 31.
Company management has classified the bonds as available-for-sale
investments. As a result of changing market conditions, the fair
value of the bonds at December 31, 2018, was $285...
Tanner-UNF Corporation acquired as a long-term investment $300 million of 7% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $300
million of 7% bonds, dated July 1, on July 1, 2018. The market
interest rate (yield) was 8% for bonds of similar risk and
maturity. Tanner-UNF paid $280 million for the bonds. The company
will receive interest semiannually on June 30 and December 31.
Company management is holding the bonds in its trading portfolio.
As a result of changing market conditions, the fair value of the
bonds at December 31, 2018, was...
Tanner-UNF Corporation acquired as an investment $260 million of 8% bonds, dated July 1, on July...
Tanner-UNF Corporation acquired as an investment $260 million of
8% bonds, dated July 1, on July 1, 2021. Company management is
holding the bonds in its trading portfolio. The market interest
rate (yield) was 10% for bonds of similar risk and maturity.
Tanner-UNF paid $220 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 $230...
Tanner-UNF Corporation acquired as an investment $260 million of 6% bonds, dated July 1, on July...
Tanner-UNF Corporation acquired as an investment $260 million of
6% bonds, dated July 1, on July 1, 2021. 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 $220 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 $230...
Tanner-UNF Corporation acquired as a long-term investment $230 million of 8% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $230
million of 8% bonds, dated July 1, on July 1, 2018. The market
interest rate (yield) was 10% for bonds of similar risk and
maturity. Tanner-UNF paid $210 million for the bonds. The company
will receive interest semiannually on June 30 and December 31.
Company management has classified the bonds as available-for-sale
investments. As a result of changing market conditions, the fair
value of the bonds at December 31, 2018, was $220...
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