Two independent situations follow:

1. On January 1, 2018, Alligator Inc. issued $6,000,000 of 5%, eight-year, callable bonds priced to yield 6%. The bonds may be called at 101 on or after December 31, 2021. Interest is payable on June 30 and December 31. Alligator Inc. calls 40% of the outstanding bonds ($2,400,000) on January 1, 2023.

2. On January 1, 2019, Crocodile Ltd. issued $5,000,000 of 6%, six-year bonds priced to yield 5.5%. Interest is payable on June 30 and December 31. Crocodile repurchases the outstanding bonds on July 1, 2022, at which time the market rate of interest is 7%.

Required:

Prepare journal entries to record:
a. The sale and retirement of the called bonds in Scenario 1.
b. The sale and retirement of the bonds in Scenario 2.