What should Landis report as a gain or loss when selling bonds after accruing for interest?

When determining the gain or loss from the sale of bonds after accruing for interest, it is essential to consider both the carrying value of the bonds at the time of sale and the sale price of those bonds.

In this case, if Landis accrued the interest earned on the bonds prior to sale, this accrued interest would need to be factored into the carrying value. If the bonds were sold for less than their carrying value after taking into account the accrued interest, it would result in a loss. Conversely, if the bonds were sold for more than the carrying value, it would reflect a gain.

Reporting a gain or loss accurately reflects the true economic transaction and the financial position of Landis after the sale. Therefore, if the calculation yields a difference of $7,440 indicating that the sale price was below the carrying amount after considering accrued interest, this number would be reported as a loss.

This situation illustrates the importance of recognizing interest accruals and their impact on the overall value of investments when they are disposed of. In financial reporting, accurate measurement and reporting of gains and losses are crucial for transparency and decision-making.