PB$10-5($Algo$)$ Recording and Explaining the Early Retirement of Debt $[$LO $10-3]$

QPF Movie Group, owns and operates movie theaters worldwide. Assume the company issued $4$ percent bonds at their $$58,800,000$ face value and then used all of these cash proceeds to retire bonds with a stated interest rate of $5$ percent. At that time, the $5$ percent bonds had a carrying value of $$56,000,000.$

Required:

Prepare the journal entries to record the issuance of the $4$ percent bonds and the early retirement of the $5$ percent bonds. Assume both sets of bonds were issued at face value.

$2$ Where should QPF report any gain or loss on this transaction?

What dollar amount of interest expense is QPF saving each year by replacing the $5$ percent bonds with the $4$ percent bonds?

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What dollar amount of interest expense is QPF saving each year by replacing the $5$ percent bonds with the $4$ percent bonds?

Interest Saved

per year