Matthew Perry Company had outstanding $6,000,000 of 11% bonds (interest payable January 31 and July 31) due in 10 years. On July 1, the company issued $9,000,000 of 10%, 15-year bonds (interest payable on January 1 and July 1) at 98. A portion of the proceeds of the $9,000,000 bonds was used to call the entire balance of the 11% bonds (with an unamortized discount of $120,000) at 102 on August 1.

Instructions:

Prepare the journal entries necessary to (1) record the issue of the new bonds and (2) recognize the early redemption of the 11% bonds.