Alucard Company leases and operates a retail sore. The store lease, an operating lease, calls for a base monthly rental of P25,000 on the first day of each month. Additional rent is computed at 6% for net sales over P3,000,000 up to P6,000,000 and 5% of net sales over P6,000,000. The net sales for the current period were P10,000,000. During the current year, the lessee paid executory costs to the lessor for the property tax of P150,000 and insurance of P50,000. The annual depreciation of the store building was P400,000. What total expenses should be reported by the lessee in relation to the lease for the current year?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Alucard Company leases and operates a retail sore. The store lease, an operating lease, calls for a base monthly rental of P25,000 on the first day of each month. Additional rent is computed at 6% for net sales over P3,000,000 up to P6,000,000 and 5% of net sales over P6,000,000. The net sales for the current period were P10,000,000. During the current year, the lessee paid executory costs to the lessor for the property tax of P150,000 and insurance of P50,000. The annual depreciation of the store building was P400,000. What total expenses should be reported by the lessee in relation to the lease for the current year?
 
a.P1,200,000
b.P1,080,000
c. P890,000
d.P880,000
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