On November 1, 2008, Morton Co. purchased Gomez, Inc., 10-year, 9% bonds with a face value of $250,000, for $225,000. An additional $7,500 was paid for the accrued interest. Interest is payable semiannually on January 1 and July 1. The bonds mature on July 1, 2015. Morton uses the straight-line method of amortization. Ignoring income taxes, the amount reported in Morton's 2008 income statement as a result of Morton's available-for-sale investment in Gomez was

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Quizplus · Accepted Answer

($250,000 × .045) + ($25,000 × 2/80) - $7,500 = $4,375.