On January 2, 2015,CulverCorporation, a small company that follows ASPE, issued $2.6million of7% bonds at98due on December 31, 2024. Legal and other costs of $260,000were incurred in connection with the issue.CulverCorporation has a policy of capitalizing and amortizing the legal and other costs incurred by including them with the bond recorded at the date of issuance. Interest on the bonds is payable each December 31. The $260,000of issuance costs are being deferred and amortized on a straight-line basis over the 10-year term of the bonds. The discount on the bonds is also being amortized on a straight-line basis over the 10 years. (The straight-line method is not materially different in its effect compared with the effective interest method.)

The bonds are callable at105(that is, at105% of their face amount), and on January 2, 2020, the company called a face amount of $1,400,000of the bonds and retired them.

Ignoring income taxes, calculate the amount of loss, if any, that the company needs to recognize as a result of retiring $1,400,000of bonds in 2020. Prepare the journal entry to record the retirement.(Round answer to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Jan. 2, 2020

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List of Accounts

How would the amount of the loss calculated in part (a) differ ifCulver's policy had been to carry the bonds at fair value and thus expense the costs of issuing the bonds at January 2, 2015? Assuming thatCulverCorporation had followed this policy, prepare the journal entry to record the retirement. Assume the redemption price approximates fair value.(Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Jan. 2, 2020