Interest income on the sale of bond

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Daniel purchased a bond on July 1, 2010, at par of $10,000 plus accrued interest of $400. On December 31, 2010, Daniel collected the $800 interest for the year. On January 1, 2011, Daniel sold the bond for $10,200.

A) Daniel must recognize $800 interest income for 2010 and a $200 gain on the sale of the bond in 2011.

B) Daniel must recognize $400 interest income for 2010 and a $200 loss on the sale of the bond in 2011.

C) Daniel must recognize $800 interest income for 2010 and a $200 loss on the sale of the bond in 2011.

D) None of the above.

E) Daniel must recognize $400 interest income for 2010 and a $200 gain on the sale of the bond in 2011.

Reference no: EM13136650

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