Marjorie Manufacturing Ltd. issued a convertible bond on 2 July 20X5. The $5 million bond pays annual interest of 8% each 30 June. Each $1,000 bond is convertible into 50 shares of common stock, at the investor's option, on 1 July 20X10 until 1 July 1 20X15, after which time each $1,000 bond may be converted into 45.6 shares until bond maturity on 30 Jtne 20X20. Market analysts have indicated that had the bond not been convertible, it would have sold for $4,240,000, reflecting a market interest rate of 10% annually. In fact, it was issued for $5,325,000. Required: 1. Provide the journal entry to record the initial issuance of the bond. Justify the amount allocated to the conversion privilege. 2. Verify the $4,240,000 price of the bond. 3. Calculate the interest expense that would be recorded in the first 12 months of the bond. 4. Would more or less interest expense have been recorded in requirement 3 if the conversion option were not recognized and the proceeds above par value ($325,000) were assigned to a premium account? Explain, but do not calculate.