AMC Entertainment Inc. owns and operates movie theatres. The company sold \(117 / 8\) percent bonds for \(\$ 52,750,000\) and used the cash proceeds to retire bonds with a face value of \(\$ 50,000,000\) with a coupon rate of 13.6 percent. At that time, the old bonds had a carrying amount of \(\$ 49,547,000\).

\section*{Required:}

1. Why did the company issue new bonds to retire the old bonds?

2. Prepare the journal entries to record the issuance of the new bonds and the early retirement of the old bonds.

3. How should AMC report the gain or loss on retirement of the old bonds?