Briar Industries sold its 5% bonds with a maturity value of $4,000,000 on January 1^st, 2019. At the time of the sale, the bonds had 10 years until they reached maturity and a market rate of 6%. Interest on the bonds is payable annually on January 1^st.The bonds are callable at 101 at any time after July 1^st, 2020. The company uses the effective rate of interest to amortize the bond discount.

On July 1^st, 2020, the company retired 75% of the bond issue at the call price of 101.

Required:

1.Determine the present value of the bond and provide the journal entry to record the issue of the bond on January 1^st, 2019.

2.In the final analysis, how much was the gain or loss experienced by Briar in reacquiring its 5% bonds?Provide the journal entries to retire the bond on July 1^st, 2020. Show all calculations. (8 marks)

3.What is the carrying value of the bond, as it would appear on the balance sheet, at December 31, 2017? (2 marks)