Problem: On June 30, 2013, Hardy Corporation issued $12.5 million of its 12% bonds for $11.4 million. The bonds were priced to yield 14%. The bonds are dated June 30, 2013, and mature on June 30, 2020. Interest is payable semiannually on December 31 and July 1.
Required:
Question: If the effective interest method is used, by how much should the bond discount be reduced for the six months ended December 31, 2013?
Note: Please describe comprehensively and provide step by step solution.