On January 1, 2020, Titans Corp. issued bonds with a par value of $ 1,000,000 at 98 (which is net of issue costs), due in 15 years. Six years after the issue date, the entire issue is called at 102 and cancelled. On the date of call, the carrying value of the bonds, including discount, is $988,000.

Instructions

1. Calculate the gain or loss of the reacquisition of the bond. (3 marks)
2. Prepare the journal entry to reflect the reacquisition of the bond. (3 marks)