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Question 1: Nevada, Inc. issued a P5, 000,000, 10%, 10-year bonds on July 1, 2015 for 113.6 when the effective interest rate was 8%. Interest is payable on June 30 and December 31.
How much interest expense should Nevada report in profit or loss for the year ended December 31, 2015?
a. P 284,000
b. P 250,000
c. P 227,200
d. P 200,000
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