Daniel purchased a bond on July 1, 2014, at par of $10,000 plus accrued interest of $300. On December 31, 2014, Daniel collected the $600 interest for the year. On January 1, 2015, Daniel sold the bond for $10,200.
a. Daniel must recognize $300 interest income for 2014 and a $200 gain on the sale of the bond in 2015.
b. Daniel must recognize $600 interest income for 2014 and a $200 gain on the sale of the bond in 2015.
c. Daniel must recognize $600 interest income for 2014 and a $100 loss on the sale of the bond in 2015.
d. Daniel must recognize $300 interest income for 2014 and a $100 loss on the sale of the bond in 2015.
e. None of these.
Answer: a