Landis Co. purchased $500,000 of 8%, 5-year bonds from Ritter, Inc. on January 1, 2011, with interest payable on July 1 and January 1. The bonds sold for $520,790 at an effective interest rate 7%. Using the effective interest method, Landis Co. decreased the Available-for-Sale Debt Securities account for the Ritter, Inc. bonds on July 1, 2011 and December 31, 2011 by the amortized premiums of $1770 and $1830 respectively.
At April 1, 2012, Landis Co. sold the Ritter bonds for $515,000. After accruing for interest, the carrying value of the Ritter bonds on April 1, 2012 was $516,875.
Assuming Landis Co has a portfolio of Available-for-Sale Debt securities, what should Landis Co report as a gain or loss on the bonds?
a) ($1,875)
b) ($10,935)
c) $0
d) ($14,685)