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    Plano Co: How much gain should be reported on the sale of bonds?

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    During 2005, Plano Co. purchases 2,000, $1,000, 9% bonds. The carrying value of the bonds at December 31, 2007 was $1,960,000. The bonds mature on March 1, 2012, and pay interest on March 1 and September 1. Plano sells 1,000 bonds on September 1, 2008, for $988,000, after the interest has been received. Plano uses straight-line amortization. The sale on the gain is...?

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    Solution Preview

    The face value of the bonds is 2,000,000 and the carrying value is 1,960,000. The discount on bonds is 40,000 as on Dec 31,2007.

    Until Sep ...

    Solution Summary

    The solution explains how to calculate the gain on sale of bonds for Plano Co.