Daniel purchased a bond on July 1,2014,at par of $10,000 plus accrued interest of $300.On December 31,2014,Daniel collected the $600 interest for the year.On January 1,2015,Daniel sold the bond for $10,200.

Question

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The $600 collected consists of $300 of gross income for the interest earned from July 1 through December 31 and $300 of accrued interest that was purchased.The cost of the bond was $10,000;thus Daniel has a $200 gain ($10,200 - $10,000)on the sale.

Daniel Purchased a Bond on July 1,2014,at Par of $10,000