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Cullumber Company purchased $2450000 of 8%, 5-year bonds from Ritter, Inc. on January 1, 2018, with...

Cullumber Company purchased $2450000 of 8%, 5-year bonds from Ritter, Inc. on January 1, 2018, with interest payable on July 1 and January 1. The bonds sold for $2585740 at an effective interest rate of 7%. Using the effective-interest method, Cullumber Company decreased the Available-for-Sale Debt Securities account for the Ritter, Inc. bonds on July 1, 2018 and December 31, 2018 by the amortized premiums of $9520 and $9880, respectively.

At April 1, 2019, Cullumber Company sold the Ritter bonds for $2540000. After accruing for interest, the carrying value of the Ritter bonds on April 1, 2019 was $2547440. Assuming Cullumber Company has a portfolio of Available-for-Sale Debt Securities, what should Cullumber Company report as a gain or loss on the bonds?

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Assuming Cullumber Company has a portfolio of Available-for-Sale Debt Securities, the Cullumber Company should report the followiung as a gain or loss on the bonds,

$2,547,440 - $2,540,000 = $ 7,440

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