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On October 1, Year 1, Test Company purchased $80,000,6% A Company bonds for $80,000. The bonds pay interest quarterly with the next interest payment due
On October 1, Year 1, Test Company purchased $80,000,6% A Company bonds for $80,000. The bonds pay interest quarterly with the next interest payment due on January 1. Test Company management plans to trade the bonds in the short term. The fair value of the bonds on December 31, Year 1 was $90,000. On January 1, Year 2, Test Company sold all of the bonds for $90,000. Assume that Tests Company held no other investments during Year 1 or Year 2. Determine the amount that pretax income would increase (decrease) in Year 2 as a result of the investment. Give your answer using dollar signs and commas but not decimals (cents). Example: $12,345 or $(12,345)
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