What amount should be recognized as gain on sale of bonds

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Reference no: EM132816391

GAIN OR LOSS ON SALE OF BOND INVESTMENT

Hawk Company purchased 8,000, P1,000 face amount, 9% bonds to yield 10%. The carrying amount of the bonds on January 1, 2019 was P7,800,000. The bonds mature on June 30, 2022 and pay interest semiannually on June 30 and December 31.

The entity sold 4,000 bonds on March 1, 2019 for P3,920,000 after the interest has been received.

Problem 1: What amount should be recognized as gain on sale of bonds?

A. P 25,000

B. P 20,000

C. P 15,000

D. P 0

Reference no: EM132816391

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