Sandhill Company purchased $3400000 of 8%, 5-year bonds from Blue, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $3516740 at an effective interest rate of 7%. Using the effective-interest method, Sandhill Company decreased the Available-for-Sale Debt Securities account for the Blue, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $11420 and $11780, respectively. At April 1, 2022, Sandhill Company sold the Blue bonds for $3490000. After accruing for interest, the carrying value of the Blue bonds on April 1, 2022 was $3497440. Assuming Sandhill Company has a portfolio of Available-for-Sale Debt Securities, what should Sandhill Company report as a gain or loss on the bonds? $-23200. $-7440. $ 0. $-116740.
Sandhill Company purchased $3400000 of 8%, 5-year bonds from Blue, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $3516740 at an effective interest rate of 7%. Using the effective-interest method, Sandhill Company decreased the Available-for-Sale Debt Securities account for the Blue, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $11420 and $11780, respectively.
At April 1, 2022, Sandhill Company sold the Blue bonds for $3490000. After accruing for interest, the carrying value of the Blue bonds on April 1, 2022 was $3497440. Assuming Sandhill Company has a portfolio of Available-for-Sale Debt Securities, what should Sandhill Company report as a gain or loss on the bonds?
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