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: Date Cash Interest Amortization Balance January 1, Year 1 $ 42,734 End of Year 1 End of Year 2 $ 2,562 P $ 2,393 $ 169 42,565 ? ? 42,387 End of Year 3 End of Year 4 ? P P 188 2,363 P 42,000 7. What was the annual market rate of interest on the date the bonds were issued? (Enter your answer as a percentage rounded to 1 decimal place (i.e. 0.123 should be entered as 12.3).) Market rate of interest % 8. 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.) Year 2 Year 3 Interest Expense 9. What amount will be reported on the balance sheet at the end of Year 2 and Year 3? Bonds Payable Year 2 Year 3