On December 31, 20X2, an insurance company purchased $10 million of 10-year, 10% debentures for $8,852,950. On

Question:

On December 31, 20X2, an insurance company purchased $10 million of 10-year, 10% for $8,852,950. On December 31, 20X3 (after all interest payments and amortization had been recorded for 20X3), the insurance company sold all the for $9.2 million. The market interest rate at purchase when the bonds were issued was 12%. Interest payments are semiannual.
1. Compute the gain or loss on the sale for the insurance company (i.e., the investor).
2. Prepare the appropriate journal entries for the insurance company (i.e., the investor).

Debentures
Debenture DefinitionDebentures are corporate loan instruments secured against the promise by the issuer to pay interest and principal. The holder of the debenture is promised to be paid a periodic interest and principal at the term. Companies who...