A company retired $60 million of its 6% bonds at 102 (61.2 million) before their

Question

A company retired $60 million of its 6% bonds at 102 (61.2 million) before their scheduled maturity. At that time, the bonds had remaining discount of 2 million. Prepare journal entry to record redemption of bonds.

Please show you work. I am getting two different answers from two differnt sources. The book solution has a profit of 800,000, but my teachers solution has a loss of 3.2 million....really not sure which on is correct. I'm really confused. I see how both answers were reached, but not sure to determine which would be correct.  

Explanation / Answer

General Journal Debit Credit Bonds payable $60 million Loss on early extinguishment $3.2 million Discount on bonds payable $2 million Cash ($60,000,000 x 102%) $61.2 million

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