Feltham Company acquired used machine tools costing \(\$ 75,000\) from various sources, These machine tools were then sold to Mock Corporation. Delivery costs paid by Feltham Company totaled \(\$ 4,500\). Mock Corporation had agreed to pay \(\$ 100,000\) cash for these tools. Finding itself short of cash, however. Mock Corporation offered \(\$ 110,000\) of its parvalue bonds to Feltham Company. These bonds promised 8 percent interest per year. At the time the offer was made, the bonds could have been sold in public bond markets for \(\$ 98,000\).

Feltham Company accepted the offer and held the bonds for 3 years. During the 3 years, it received interest payments of \(\$ 8,800\) per year, or \(\$ 26,400\) total. At the end of the third year, Feltham Company sold the bonds for \(\$ 95,000\).

a What profit or loss did Feltham Company recognize on the sale of machine tools to Mock Corporation?

b What profit or loss would Feltham Company have recognized on the sale of machine tools if it had sold the bonds for \(\$ 98,000\) immediately upon receiving them?

c What profit or loss would Feltham Company have recognized on the sale of machine tools if it had held the bonds to maturity, receiving \(\$ 8,800\) each year for another 5 years and \(\$ 110,000\) at the time the bonds matured?