On December 31, 2017, Dome Company issued P4,000,000, 8% serial bonds, to be repaid in the amount of P800,000 each year. Interest is payable annually on December 31. The bonds were issued to yield 10% a year. The bond proceeds totaled P3,805,600 based on the present value on December 31, 2017 of five annual payments.Due datePrincipalInterestPresent value on 12/31/1712/31/18800,000320,0001,018,00012/31/19800,000256,000 872,20012/31/20800,000192,000 745,00012/31/21800,000128,000 633,80012/31/22800,000 64,000 536,600 3,805,600 What is the carrying amount of the bonds payable on December 31, 2018 using the interest method of amortizing the bond discount?Group of answer choices3,386,1603,866,1603,066,1602,354,775

Annual interest payment = face value of bonds x rate of interest x no. of months/12 = P4,000,000 x…

Answered: On December 31, 2017, Dome Company…

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 6PA: Saverin, Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin, Inc. issued 62,500,000...

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On December 31, 2017, Dome Company issued P4,000,000, 8% serial bonds, to be repaid in the amount of P800,000 each year. Interest is payable annually on December 31. The bonds were issued to yield 10% a year. The bond proceeds totaled P3,805,600 based on the present value on December 31, 2017 of five annual payments.

Due date	Principal	Interest	Present value on 12/31/17
12/31/18	800,000	320,000	1,018,000
12/31/19	800,000	256,000	872,200
12/31/20	800,000	192,000	745,000
12/31/21	800,000	128,000	633,800
12/31/22	800,000	64,000	536,600
			3,805,600