Journal entry to record tanner-unfs investment in the bonds

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Reference no: EM131219250

Tanner-UNF Corporation acquired as a long-term investment $350 million of 7.0% bonds, dated July 1, on July 1, 2016. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $320.0 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, 2016 was $330.0 million.

Required: 1. & 2. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2016 and interest on December 31, 2016, 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 2 decimal places (i.e., 5,500,000 should be entered as 5.50).)

1) Record Tanner-UNF’s investment in the bonds on July 1, 2016.

2) Record interest on December 31, 2016.

Reference no: EM131219250

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