1. Playa Company holds 80% of Sol Companys stock, acquired on January 1, 20X1, at underlying book value. On January 1, 20X4, Playa purchased Sol bonds with a par value of $40,000. The bonds pay 10% interest annually on December 31 and mature on December 31, 20X9. Playa uses the fully adjusted equity method in accounting for its ownership in Sol. Partial balance sheet information for the two companies on December 31, 20X5 is below:

   	Playa Company	Sol Company
   Investment in Sol Company stock	$121,860
   Investment in Sol Company bonds	42,400
   Interest income	3,200
   Bonds payable		$100,000
   Interest expense		11,500
   Common stock	300,000	100,000
   Retained earnings, December 31, 20X5	501,680	50,000

   1. Compute the gain or loss on bond retirement reported in the 20X4 consolidated income statement. (remember format: 1,000 not 1000)
   2. What equity method entry would Playa make on its books related to the bond retirement in 20X5? (format for answer should be: Dr. xxx #, Cr. yyy #)