Daniel purchased a bond on July 1, 2018, at par of $10,000 plus accrued interest of $300. On December 31, 2018, Daniel collected the $600 interest for the year. On January 1, 2019, Daniel sold the bond for $10,200.

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Daniel recognized $300 of interest income in 2018 because he purchased the bond on July 1, 2018, and accrued interest of $300. He also recognized $600 of interest income in 2018 because he collected the interest for the year on December 31, 2018. Daniel recognized a gain of $200 on the sale of the bond in 2019 because he sold the bond for $10,200, which is $200 more than the par value of $10,000.

Daniel Purchased a Bond on July 1, 2018, at Par