Elmira, Inc had $20,000,000 of bonds outstanding on Dec 31, 2018. The ten year bonds were issued on Jan 1, 2012 for $21,000,000. Elmira can call the bonds at 102% any time after Jan 1, 2018. At the end of 2018 the premium on bonds payable account had a credit balance of $346,000. Acme decides to call/retire the bonds on Jan 2, 2019.

a. Compute the gain or loss on early extinguishment of debt

b. Prepare the journal entry to record the debt extinguishment