Lark Corporation retires its $800,000 face value bonds at 105 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $829,960. The entry to record the redemption will include a A) debit of $40,000 to Premium on Bonds Payable. B) credit of $10,040 to Premium on Bonds Payable. C) credit of $10,040 to Loss on Bond Redemption. D) debit of $10,040 to Loss on Bond Redemption.

Please explain your computation