On November 1, 2014, Horton Company purchased Lopez, Inc., 10-year, 9%, bonds wi

Question

On November 1, 2014, Horton Company purchased Lopez, Inc., 10-year, 9%, bonds with a face value of $600,000, for $540,000. An additional $15,000 was paid for the accrued interest. Interest is payable semiannually on January 1 and July 1. The bonds mature on July 1, 2021. Horton uses the straight-line method of amortization. Ignoring income taxes, the amount reported in Horton's 2014 income statement as a result of Horton's available-for-sale investment in Lopez was

a.   $10,500.

b.   $10,000.

c.   $9,000.

d.   $8,000.

Explanation / Answer

c. $9,000

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