On January 1, 2018, Professors Credit Union (PCU) issued 8%, 20-year bonds payable with face value of $650,000. The bonds pay interest on June 30 and December 31. Read the requirements. Requirement 1. If the market interest rate is 7% when PCU issues its bonds, will the bonds be priced at face value, at a premium, or at a discount? Explain. The 8% bonds issued when the market interest rate is 7% will be priced at a premium. They are attractive in this market, so investors will pay more than face value to acquire them. Requirement 2. If the market interest rate is 9% when PCU issues its bonds, will the bonds be priced at face value, at a premium, or at a discount? Explain. The 8% bonds issued when the market interest rate is 9% will be priced at a discount. They are unattractive in this market, so investors will pay less than face value to acquire them. Requirement 3. The issue price of the bonds is 99. Journalize the bond transactions. (Assume bonds payable are amorlized using the straight-line amortization method. Record debits first, then credits. Select explanations on the last line of the journal entry. Round your answers to the nearest whole dollar.) a. Journalize the issuance of the bonds on January 1, 2018. Date 2018 Jan. 1 Cash Accounts and Explanation Discount on Bonds Payable Bonds Payable Issued bonds at a discount. b. Joumalize the payment of interest and amortization on June 30, 2018. Date 2018 Accounts and Explanation Jun. 30 Interest Expense Discount on Bonds Payable Cash Debit Credit 643,500 6,500 650,000 Debit Credit Paid semiannual interest and amortized discount. Choose from any list or enter any number in the input fields and then click Check