Answer:
Explanation:
The journal entry is shown below:
Bonds payable A/c Dr $2,000,000
Loss on early retirement on bonds A/c Dr $85,000
To Cash A/c $2,040,000 ($2,000,000 × 1.02)
To Discount on bonds payable A/c $45,000
(Being the redemption of bond is recorded)
The loss on early retirement on bond is computed below:
= $2,040,000 - $1,955,000
= $85,000
