Luke Corp Issued $2,000,000 of 20-Year, 9% Callable Bonds on July

Multiple Choice

Luke Corp. issued $2,000,000 of 20-year, 9% callable bonds on July 1, Year 1, with interest payable on June 30 and December 31. The fiscal year of the company is the calendar year. What is the entry to record the calling of the bonds at the end of year 5 at 97? (Assume interest for the period has been separately recorded.)

A)
$\begin{array} { l r } \text { Bonds Payable } & 2,000,000 \\\text { Gain on Redemption of Bonds } & 60,000 \\\text { Cash } & 1,940,000\end{array}$
B)
$\begin{array} { l r r } \text { Bonds Payable } & 2,000,000 \\\text { Gain on Redemption of Bonds } & 60,000 & \\\quad \text { Cash } & & 2,060,000\end{array}$
C)
Bonds Payable $\quad$ 2,060,000
Cash $\quad$ 2,060,000
D)
$\begin{array} { l r } \text { Bonds Payable } & 2,060,000 \\\quad \text { Cash } & 2,000,000 \\\text { Loss on Redemption of Bonds } & 60,000\end{array}$