On January 1, 2018. Faxico, Inc. issued $4,500,000 par value 8%, 5-year bonds, interest is payable semiannually on January 1 and July 1 with the first interest payment on July 1, 2018. The market rate of interest on the date of the bond issue was 10%. Faxico retired the debt early a t the end of the third year for $4,000,000.

Required

a. Determine the carrying value of !he bond at retirement.

b. Prepare the journal entry to record the early retirement of the debt at the end o f the third year.