On July 1, 2016, Salem Corporation issued $3.4 million of 11% bonds payable in 10 years. The bonds pay interest semiannually. The bonds include detachable warrants giving the bondholder the right to purchase for $34, one share of $1 par value common stock at any time during the next 10 years. Salem sold the bonds for $3.4 million. The value of the warrants at the time of issuance was $136,000.

Required:

Prepare in general journal format the entry to record the issuance of the bonds.

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