AMC Entertainment, Inc., owns and operates 243 movie theaters with 1,617 screens in 22 states. On August 12, 1992, the company sold 1 1 7/8 percent bonds in the amount of $52,720,000 and used the cash proceeds to retire bonds with a coupon rate of 13.6 percent. At that time, the 13.6 percent bonds had a book value of $50,000,000.

Required: 1. Prepare the journal entry to record the early retirement of the 1 3.6 percent bonds. 2. How should AMC report any gain or loss on this transaction? 3. Why did the company issue new bonds in order to retire the old bonds?