Amy Corp. has $300,000 of 12% bonds callable at 102, with a remaining 10-year term, and interest payable semiannually. The bonds are currently valued on the books at $290,000. The company has just made the interest payment and any adjustment for premium or discount. Bonds of equivalent risk, etc. can be marketed at 10% and would sell at par.

a.) Record the retirement of the old bond issue.

b.) Where is the gain or loss recorded in the financial statements?

c.) Record the issuance of new 10% debt at par.

d.) How many years would it take for the reduction in interest expense to offset the cost of refinancing the bonds?