P14.4B (L0 1;2,4) (Issuance and Retirement of Bonds; Income Statement Presentation) Dunnel Company issued its...
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P14.4B (L0 1;2,4) (Issuance and Retirement of Bonds; Income Statement Presentation) Dunnel Company issued its 8\%, 20-year mortgage bonds in the principal amount of $1,000,000 on January 2, 2006, at a discount of $60,000, which it proceeded to amortize by charges to expense over the life of the issue on a straight-line basis. The indenture securing the issue provided that the bonds could be called for redemption in total but not in part at any time before maturity at 110% of the principal amount, but it did not provide for any sinking fund. On December 1, 2020, the company issued its 10%,25-year debenture bonds in the principal amount of $2,500,000 at 101, and the proceeds were used to redeem the 8%,20-year mortgage bonds on January 2,2021 . The indenture securing the new issue did not provide for any sinking fund or for retirement before maturity. Instructions (a) Prepare joumal entries to record the issuance of the 10% bonds and the retirement of the 8% bonds. (b) Indicate the income statement treatment of the gain or loss from retirement and the note disclosure required
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