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Determine entry made to record the sale of the bonds

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A company invests $700,000 in corporate bonds in 2019 and classifies them as available-for-sale. At the end of 2019, the fair value of the securities is $650,000. In 2020, the company sells the bonds for $706,000.

Question 1: Which statement is true concerning the entry made to record the sale of the bonds in 2020?

A. Other comprehensive income declines by $50,000, and income increases by $6,000.

B. Other comprehensive income increases by $50,000 and income increases by $6,000.

C. Other comprehensive income increases by $6,000, and there is no effect on income.

D. There is no effect on other comprehensive income, and income increases by $6,000.

 

Reference no: EM132466657

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