03 L05 Bond TransactionsEffective Interest M 7. Khan Corporation has $20,000,000 of 10.5 percent, 20-year bonds dated Tune 1, 20x7 with interest payment dates of May 31 and November 30. The company's fiscal year ends November 30. It uses the effective interest method to amortize bond premiums or discounts. Required 2 metrologo 1.) Assume the bonds are issued at 103 on June 1 to yield an effective inter- est rate of 10.1 percent. Prepare entries in journal form for June 1, 20x7, November 30, 20x7, and May 31, 20x8. (Round amounts to the nearest dollar.) 2. Assume the bonds are issued at 97 on June 1 to yield an effective interest rate of 10.9 percent. Prepare entries in journal form for June 1, 20x7, November 30, 20x7, and May 31, 20x8. (Round amounts to the nearest dollar.) 3. Explain the role that market interest rates play in causing a premium in requirement 1 and a discount in requirement 2. Fight