In its 2016 income statement,WME reported $11,000 of interest expense on its outstanding bonds.During the year,WME paid its regular installments of $9,000 of interest in cash.In its reconciliation schedule,WME should:

Question

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The $2,000 difference between the interest expense reported and the cash paid indicates a decrease in bond discount, which should be added back to net income under the indirect method.

In Its 2016 Income Statement,WME Reported $11,000 of Interest Expense