On 1 July 20X2, Hendrie Corp. issued $6,000,000 of 5% (payable each 30 June and 31 December),10-year bonds payable. The bonds were issued to yield 6%. The company uses effective interest amortization for the discount. Due to an increase in general interest rates, these bonds were selling in the market at the end of June 20X5 at an effective rate of 8%. Because the company had available cash, $2,400,000 (face amount) of the bonds were purchased in the market and retired on 1 July 20X5. This repurchase took place after the 30 June interest payment was made and recorded.

Required:
1. Give the entry by Hendrie to record issuance of the bonds on 1 July 20X2.
2. Give the entry by Hendrie to record the retirement of $2,400,000 of the debt on 1 July 20X5. How should the gain or loss be reported on the 20X5 financial statements of Hendrie?
3. Was the retirement economically favourable to the issuer, investor, or neither?