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Richman Company purchased $$1,200,000$ of $8\%,\text{ }5-$year bonds from Carlin, Inc. on January $1,\text{ }2025,$ with interest payable on July $1$ and January $1.$ The bonds sold for $$1,249,896$ at an effective interest rate of $7\%.$ Using the effective interest method, Richman decreased the Available$-$for$-$Sale Debt Securities account for the Carlin bonds on July $1,\text{ }2025$ and December $31,\text{ }2025$ by the amortized premiums of $$4,248$ and $$4,392,$ respectively.

At February $1,\text{ }2026,$ Richman sold the Carlin bonds for $$1,236,000.$ After accruing for interest, the carrying value of the Carlin bonds on February $1,\text{ }2026$ was $$1,240,500.$ Assuming that Richman has a portfolio of available$-$for$-$sale debt investments, what should the company report as a gain $($or loss$)$ on the bonds?



a$.$ $$0$



b$.\text{Â }($$$4,500)$



c$.\text{Â }($$$26,244)$



d$.\text{Â }($$$35,244)$

QUESTION $40$

On January $3,\text{ }2024,$ Moss Company acquires $$500,000$ of Adam Company's $10-$year, $10\%$ bonds for $$532,090$ to yield $9\%.$ Interest is payable each December $31.$ The bonds are classified as held$-$to$-$maturity. If Moss uses the effective$-$interest method, what amount of interest revenue would be recognized in $2025$ for these bonds?



$10\%$ bonds for $$532,090$ to yield $9\%.$ Interest is payable each December $31.$ The



a$.$ $$50,000$



b$.$ $$53,208$



c$.$ $$47,890$



d$.$ $$47,698$

QUESTION $41$

On January $3,\text{ }2024,$ Moss Company acquires $$500,000$ of Adam Company's $10-$year, $10\%$ bonds for $$532,090$ to yield $9\%.$ Interest is payable each December $31.$ The bonds are classified as held$-$to$-$maturity. If Moss uses the straight$-$line method, what is the amount of premium amortization that would be recognized in $2026$ for these bonds?



$10\%$ bonds for $$532,090$ to yield $9\%.$ Interest is payable each December $31.$ The



a$.$ $$3,209$



b$.$ $$2,110$



c$.$ $$2,300$



d$.$ $$2,510$

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