Koyo, Inc. sold its 10% bonds with a maturity value of $7,000,000 on August 1, 20251 for $6,896,000, before paying $100,000 of bond issue costs. At the time of the sale the bonds had 5 years until they reached maturity.\ Interest on the bonds is payable semiannually on August 1 and February 1.\ The bonds are callable at 102 at any time after August 1, 2027.\ By late 2027, the market rate of interest has declined and the fair market value of Koyo's bonds has risen to a price of 101. To take advantage of lower rates, the\ firm decides to retire the bonds with the cash from a new bond issue with a lower rate.\ On December 1, 2027, Koyo begins to buy its 10% bonds on the open market and\ purchases $1,000,000 of its bonds at 101.\ Later that same day, to retire the remainder of its outstanding bonds, Koyo\ exercises the call feature.\ Koyo uses the straight-line method to amortize discounts and premiums.