On its December 31, 2018 statement of financial position, Fed Corp. reported bonds payable of $2,840,000. The bonds had a $3,000,000 face value. On January 2, 2019, Fed retired $1,500,000 of the outstanding bonds at par plus a call premium of $35,000. How should Fed report in its 2019 income statement (ignore taxes)?

Select one:

a. Gain on extinguishment of debt $115,000.

b. Gain on extinguishment of debt $35,000.

c. Loss on extinguishment of debt $115,000.

d. Loss on extinguishment of debt $80,000.

e. None of these answers.