Richman Co. purchased $300,000 of 8%, 5-year bonds from Carlin Inc on January 1, 2010, with interest payable on July 1 and January 1. The bonds sold for $312,474 at an effective interest rate of 7%. Using the effective interest method, Richman Co decreased the Available-for-Sale Debt Securities account for the Carlin In bonds on July 1, 2010 and December 31, 2010 by the amortized premiums of $1062 and $1098 respectively.
At February 1, 2011, Richman Co sold the Carlin bonds for $309,000. After accruing interest, the carrying value of the Carlin bonds on February 1, 2011 was $310,125.
Assuming Richman Co has a portfolio of Available-for-Sale Debt Securities, what shoud Richman Co report as gain (or loss) on the bonds?
a) $0
b) $($6,561)
c) ($8,811)
d) ($1,125)