Detailed Answer
Correct answer: (C)
$7,241.
[Interest expense(7% x 966,130) = 67,629
Discount on bond payable = 7,629
Cash (6% x 1 mill) = 60,000
Bonds payable (face amt) = 1 mill
Loss on early extinguish = 7,241
Discount on bonds payable [1 mill - (966130 + 7629)] = 26,241
Cash (call price) = 981,000]