Record the payment of semiannual interest

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Question - On January 1, 2019, Drennen Inc. issued $3.6 million face amount of 6-year, 10% stated rate bonds when market interest rates were 8%. The bonds pay semiannual interest each June 30 and December 31 and mature on December 31, 2024.

Required - Assume instead that the proceeds were $3,538,000. Use the horizontal model to record the payment of semiannual interest and the related discount amortization on June 30, 2019, assuming that the discount of $62,000 is amortized on a straight-line basis. Indicate the financial statement effect.

Reference no: EM132774974

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