On January 1, 2022, GMT Inc. purchased as a long-term investment $100,000 of 8% bonds. On the purchase day, the market rate was 12%. Payment Frequency is semi-annual (June 30 and December 31). The bonds mature on December 31, 2024.
The market value of the bonds at the end of 2022 was $96,000. On July 1, 2023, GMT sold the bonds at $95,000.
Assume that GMT classified the bonds as trading securities. What is the effect of the bonds on 2023 net income?
Multiple Choice
($2,584)
$5,930
($2,798)
$3,000