On January 1, 2019, Nice Company issued 1,000 P4,000, 10% 3 year bonds for P3,807,852. Principal is due on December 31, 2021 but interests are due annually every year-end. The effective interest rate is 12%. Nice Co. incorrectly used the straight line method instead of the effective interest method to amortize the discount.

What is the effect of the error on the carrying amount of the bonds on December 31, 2019?

6,341 over

7,107 over

7,107 under

6,341 under