Question

A long-term investment in bonds with a cost of $500,000 was sold for $600,000 cash.

(a) What was the gain or loss on the sale?

Answer 1

The gain on the sale of bonds, which cost $500,000 and were sold for $600,000, is $100,000. This represents the profit from the investment.

Step-by-step explanation:

The gain or loss on the sale of an investment is calculated by subtracting the original cost of the investment from the sale price. In this scenario, the investment bonds with an original cost of $500,000, and they were sold for $600,000 cash.

To determine the gain, we subtract the original cost of the bonds from the sale price:

• Sale Price = $600,000
• Cost Price = $500,000
• Gain = Sale Price - Cost Price

By plugging in the values:

• Gain = $600,000 - $500,000

Therefore, the gain on the sale of the bonds is:

• Gain = $100,000

This financial gain represents the profit made from the investment in the bonds over the period they were held, excluding any interest or dividends received during that time.