A company issued $1,000,000 of 30-year, 8% callable bonds on April 1, with interest payable on April 1 and October 1. The fiscal year of the company is the calendar year. The bonds are called at the end of year 3 for 104. What is the entry to record the redemption? (Assume the interest payment has been recorded separately.)

a.

Bonds Payable	1,000,000
Gain on Redemption of Bonds	40,000
Cash		1,040,000

b.

Bonds Payable	1,000,000
Loss on Redemption of Bonds	40,000
Cash		1,040,000

c.

Bonds Payable	1,040,000
Cash		1,000,000
Loss on Redemption of Bonds		40,000

d.

Bonds Payable	1,000,000
Cash		1,000,000