inancial buys and sells securities expecting to earn profits

inancial buys and sells securities expecting to earn profits on short-term differences in price. On December 27. 2018, s&l; purchased Coca-Cola bonds for $935,000 and sold the the bonds on January 3, 2019, for $937,500. At December 31, the b fair value of $931,000. onds had a What pretax amounts did S& include in its 2018 and 2019 net income as a result of this investment (ignoring interest)? 2018 2019

Solution

Date Particular Amount Diifference Dec , 27 2018 Purchase Value of the investment = $       9,35,000 Dec , 31 2018 Value of the Bonds = $       9,31,000 $            -4,000 Jan, 03 2019 Sales Price of the bonds = $       9,37,500 $              6,500 Answer = Year Pretax Amount 2018 $                                                                                                 -4,000 2019 $                                                                                                   6,500