Zoe purchases Tan, Inc. bonds for $108,000 on January 2, 2022. The face value of the bonds is $100,000; the maturity date is December 31, 2026; and the annual interest rate is 5%. Zoe will amortize the premium only if he is required to do so. Zoe sells the bonds on July 1, 2024, for $106,000.

a. Determine the interest income Zoe should report for 2022.

b. Calculate Zoe’s recognized gain or loss on the sale of the bonds in 2024.