[The following information applies to the questions displayed below.]Alexi Co. issued $3.30 million face amount of 5%, 10-year bonds on June 1, 2019. The bonds pay interest on an annual basis on May 31 each year. b-1. Independent of your answer to part a, assume that the proceeds were $2,936,000. Use the horizontal model to show the effect of issuing the bonds. Indicate the financial statement effect. (Enter your answers in whole dollars, not in millions. Enter decreases with a minus sign to indicate a negative financial statement effect.) The image presents a segment of a financial accounting exercise focusing on bond issuance and its representation in a horizontal model. Below is the transcription and detailed explanation:### TranscriptionMain Text:- "[displayed below.]"- "year bonds on June 1, 2019. The bonds pay interest on an annual"Details regarding the bond issuance:- "proceeds were $2,936,000. Use the horizontal model to show the effect of"- "Enter your answers in whole dollars, not in millions. Enter decreases with"- "ffect.)"### Diagram Explanation#### Horizontal Model LayoutThe diagram consists of a horizontal model divided into two main sections: Balance Sheet and Income Statement.1. **Balance Sheet** - **Liabilities**: - Empty field available for entries. - **Stockholders' Equity**: - Empty field with an indication for a decrease ("←"). - **Net Income**: - Empty field indicating where the net effect will be calculated ("=").2. **Income Statement** - **Revenues**: - Empty field with indication for positive entries ("+"). - **Expenses**: - Empty field with indication for negative entries ("-"). - The calculation format implies a basic income statement equation: Revenues minus Expenses equals Net Income.The horizontal model requires the user to input details reflecting the financial impact of the bond proceeds and any changes in financial statements due to transactions. The instructions emphasize entering all answers in whole dollars and using specific symbols to denote decreases. ## Required Information**Note:** The following information applies to the questions displayed below.Alexi Co. issued $3.30 million face amount of 5%, 10-year bonds on June 1, 2019. The bonds pay interest on an annual basis on May 31 each year.### Task b-1:Assume that the proceeds were $2,936,000. Use the horizontal model to show the effect of issuing the bonds. Indicate the financial statement effect. *(Enter your answers in whole dollars, not in millions. Enter decreases with a minus sign to indicate a negative financial statement effect.)*### Horizontal Model:- **Balance Sheet:** - **Assets:** - Cash: $2,936,000 - **Liabilities:** - Bonds payable: [Space for entry] - Discount on bonds payable: [Space for entry] - **Stockholders’ Equity:** [Space for entry]- **Income Statement:** - **Net Income:** - Revenues: [Space for entry] - Expenses: [Space for entry]This exercise involves the application of accounting principles to understand the impact of bond issuance on financial statements, particularly focusing on balance sheet changes and the potential effects on stockholders' equity and net income.

Under horizontal model, effect of all the transactions is being recognised and analysis on all the financial statements like Income statement, balance sheet etc.By issue of bonds of par value $33,00,000 at $29,36,000 Cash is increased by $29,36,000 Bonds Payable will be increased by $33,00,000 DIscount on bonds payable will be recorded by = 33,00,000 - 29,36,000 = $364,000