On January 1, 2012, Ladon Corporation issued $5,000,000 of 10% bonds at 102 due December 31, 2021. Legal and other costs of $81,000 were incurred in connection with the issue. Interest on the bonds is payable annually each December 31. The $81,000 issue costs are being deferred and amortized on a straight-line basis over the 10-year term of the bonds. The premium on the bonds is also being amortized on a straight-line basis over the 10 years. (Straight-line is not materially different in effect from the preferable “interest method”.) The bonds are callable at 105 (i.e., at 105% of face amount), and on January 2, 2014, London called one-half of the bonds and retired them.

Instructions
Ignoring income taxes compute the amount of loss, if any, to be recognized by London as a result of retiring the $2,000,000 of bonds in 2014 and prepare the journal entry to record the retirement.
(AICPA adapted)