Cummings, Inc. had outstanding $8,000,000 of 12% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued $12,000,000 of 10%, 15-year bonds (interest payable July 1 and January 1) at 98. A portion of the proceeds was used to call the 12% bonds at 106 on August 1. Unamortized bond discount and issue cost applicable to the 12% bonds were $150,000 and $60,000, respectively.

Instructions
Prepare the journal entries necessary to record the issue of the new bonds and the refunding of the bonds.