Windsor Company issued its $9\%,25-$year mortgage bonds in the principal amount of $$2,750,000$ on January $2,2011,$ at a discount of

$$151,000,$ which it proceeded to amortize by charges to expense over the life of the issue on a straight$-$line basis. The indenture

securing the issue provided that the bonds could be called for redemption in total but not in part at any time before maturity at $105\%$

of the principal amount, but it did not provide for any sinking fund.

On December $18,2025,$ the company issued its $12\%,20-$year debenture bonds in the principal amount of $$4,340,000$ at $102,$ and the

proceeds were used to redeem the $9\%,25-$year mortgage bonds on January $2,2026.$ The indenture securing the new issue did not

provide for any sinking fund or for redemption before maturity.

a$.$ Prepare journal entries to record the issuance of the $12\%$ bonds and the redemption of the $9\%$ bonds. $($Record entries in the order

displayed in the problem statement. If no entry is required, select $"$No Entry" for the account titles and enter $O$ for the amounts. Credit account

titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.$)$

Date

Account Titles and Explanation

Debit

Credit

b$1.$ Indicate the income statement treatment of the gain or loss from redemption.