On January 1, 2020, Tracy Supply purchased ten bonds on the open market, paying $9,260. The bonds had a total face value of $10,000, a stated interest rate of interest of 5 percent, and a time to maturity of ten years. As of the end of 2020, the bonds had a market value of $9,500. Assume that interest payments are received once per year on the last day of the year, and compute the December 31, 2020, balance sheet value and the effect on 2020 net income under the following three assumptions.
a. Tracy accounts for this investment by classifying the bonds as trading securities.
b. Tracy accounts for this investment by classifying the bonds as available-for-sale securities
c. Tracy accounts for this investment by classifying the bonds as held-to-maturity securities.