Kona issues $4,000,000 face value of bonds at 98 on January 1, Year 1. The bonds are dated

January 1, Year 1, pay interest semiannually at 8% on June 30 and December 31, and mature in

10 years. Straight-line amortization is used for discounts and premiums. On September 1,

Year 4, $3,300,000 of the bonds are called at 103 plus accrued interest. What gain or loss

would be recognized on the called bonds on September 1, Year 4? The Correct Answer should be Gain $140,778.