On January 1, 2020, Team Payaman Corporation issued 10,000 of its 12%, P1,000 face value 5-year bonds at 105. Interest on the bonds is payable annually every December 31. In connection with the sale of these bonds, Team Payaman paid the following expenses:

Promotion costs P100,000

Engraving and printing 400,000

Underwriters commissions 500,000

Required: Using the straight line method, what amount should Team Payaman report as bond interest expense for the year 2020?

a. P1,200,000

b. P1,300,000

c. P1,100,000

d. P1,600,000

*Kindly provide an explanation as well. Thank you!