On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year on December 31. The bonds mature at the end of four years. Olive uses the effective-interest amortization method. The partially completed amortization schedule below pertains to the bonds:

a. What was the annual market rate of interest on the date the bonds were issued? (Enter your answer as a percentage rounded to the nearest whole percent (i.e. 0.123 should be entered as 12).)

b. What amount of interest expense will be reported on the income statement for Year 2 and Year 3?(Round your final answers to nearest whole dollar amount.)

c. What amount will be reported on the balance sheet at the end of Year 2 and Year 3?

Date January 1, Year 1 End of Year 1 End of Year 2 End of Year 3 End of Year 4 Cash 3,600 3,600 3,600 3,600 Interest Amortization Balance 48,813 183 48,630 3,417 196 3,404 48,434 210 3,390 48,224 224 3,376 48,000