Cyril Corporation purchased $25,000 of Baker Construction Company’s 12% bonds at 102% plus accrued interest on February 1, 2002. The bonds mature on April 1, 2009, and interest is payable on April 1 and October 1. Cyril Corporation uses the straight-line method of amortizing bond premiums and discounts. 1. Record all journal entries to account for this investment during the years 2002 and 2003, assuming that Cyril closes its books annually on December 31. 2. Interpretive Question: At the time these bonds were purchased (February 1, 2002), was the market rate of interest above or below 12%? Explain.