Richman Company purchased $$1,200,000$ of $8\%,5-$year bonds from Carlin, Inc. on January $1,2025,$ with interest payable on July $1$ and January $1.$ The bonds sold for $$1,249,896$ at an effective interest rate of $7\%.$ Using the effective interest method, Richman decreased the Available$-$for$-$Sale Debt Securities account for the Carlin bonds on July $1,2025$ and December $31,2025$ by the amortized premiums of $$4,248$ and $$4,392,$ respectively.

At February $1,2026,$ Richman sold the Carlin bonds for $$1,236,000.$ After accruing for interest, the carrying value of the Carlin bonds on February $1,2026$ was $$1,240,500.$ Assuming that Richman has a portfolio of available$-$for$-$sale debt investments, what should the company report as a gain $($or loss$)$ on the bonds?

a$.$ $$0$

b$.($$$4,500)$

c$.($$$26,244)$

d$.($$$35,244)$

QUESTION $40$

On January $3,2024,$ Moss Company acquires $$500,000$ of Adam Company's $10-$year, $10\%$ bonds for $$532,090$ to yield $9\%.$ Interest is payable each December $31.$ The bonds are classified as held$-$to$-$maturity. If Moss uses the effective$-$interest method, what amount of interest revenue would be recognized in $2025$ for these bonds?

$10\%$ bonds for $$532,090$ to yield $9\%.$ Interest is payable each December $31.$ The

a$.$ $$50,000$

b$.$ $$53,208$

c$.$ $$47,890$

d$.$ $$47,698$

QUESTION $41$

On January $3,2024,$ Moss Company acquires $$500,000$ of Adam Company's $10-$year, $10\%$ bonds for $$532,090$ to yield $9\%.$ Interest is payable each December $31.$ The bonds are classified as held$-$to$-$maturity. If Moss uses the straight$-$line method, what is the amount of premium amortization that would be recognized in $2026$ for these bonds?

$10\%$ bonds for $$532,090$ to yield $9\%.$ Interest is payable each December $31.$ The

a$.$ $$3,209$

b$.$ $$2,110$

c$.$ $$2,300$

d$.$ $$2,510$