On January 2, Year 2, Sonny Bono Company issued $1,500,000 of 10% bonds at 97 due December 31, Year 11. Interest on the bonds is payable each December 31. The discount on the bonds is also being amortized on a straight-line basis over the 10-year life of the bonds. (Straight-line amortization is not materially different in effect from the preferable effective-interest method.)

The bonds are callable at 101 (i.e., at 101% of face amount), and on January 2, Year 7, Bono called $750,000 face amount of the bonds and redeemed them.

Instructions:

Prepare the journal entry to record the early redemption of the bonds.