Question

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. Record the entry to adjust the fair value.

Homework Answers

Answer #1

Solution:

Journal Entries - Tanner UNF Corportation
Event Date Particulars Debit (In Million) Credit (In Million)
1 1-Jul-18 Investment in Bond Dr $260.00
         To Discount on bond investment $40.00
         To Cash $220.00
(Being investment in bond recorded)
2 31-Dec-18 Cash Dr ($260 * 7% * 6/12) $9.10
Discount on bond investment Dr $0.80
         To Interest revenue ($220*9%*6/12) $9.90
(Being revenue recoginition for bond interest and discount amortized)
3 31-Dec-18 Fair value adustment Dr ($230 - $220.80) $9.20
         To Unrealized holding gain on trading investment $9.20
(To record adjustment entry to recognized bond at fair value)
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Tanner-UNF Corporation acquired as a long-term investment $270 million of 8% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $270 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 $230 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 $240 million of 6% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $240 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 $200 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 $290 million of 8% bonds, dated July 1, on July...
Tanner-UNF Corporation acquired as an investment $290 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 $260 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 $270...
Tanner-UNF Corporation acquired as an investment $220 million of 6% bonds, dated July 1, on July...
Tanner-UNF Corporation acquired as an investment $220 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 $180 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 $190...
Tanner-UNF Corporation acquired as a long-term investment $220 million of 4.0% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $220 million of 4.0% 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 6% for bonds of similar risk and maturity. Tanner-UNF paid $180.0 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 $240 million of 6% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2018. Company management has the positive intent and ability to hold the bonds until maturity, but when the bonds were acquired Tanner-UNF decided to elect the fair value option for accounting for its investment. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on...
Tanner-UNF Corporation acquired as a long-term investment $235 million of 8% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $235 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 $200 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 $215...
Tanner-UNF Corporation acquired as a long-term investment $235 million of 8% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $235 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 $200 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 $215...
Tanner-UNF Corporation acquired as a long-term investment $340 million of 6.0% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $340 million of 6.0% 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 $310.0 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 $340 million of 6.0% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $340 million of 6.0% 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 $310.0 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...