tin units and the margin of safety at the current level of sales. Exercise 2 On September 1, 2020, Geralt AG issued a 1,000,000, 6%, 5-year bond payable. The effective market interest rate at the date of issuance is 7%. The bond pays annual interests each August 31st. Answer the following questions about Geralt's bonds payable: a) What is the maturity value of the bonds? b) What is the carrying amount of the bonds at December 31, 2020? c) What is the annual cash interest payment on the bonds? d) What is the total interest expense in 2020? Journalize the issuance of the bond, the necessary adjustments and the end of 2020, and the annual interest payment in 2021. Exercise 3