On January 1, Lessor Company signed a 1-year rental with quarterly payments of P100,000 due at the end of each quarter. In addition, the lessee must pay contingent rent of 5% of all sales in excess of P10,000,000. The contingent rent is paid in one payment on December 31. The same lessee has used the building for the past 5 years, and in each of those years the lessee reached the contingent rent threshold of P10,000,000 in sales. Sales of the lessee for the first two quarters are as follows: Quarter ended Amount March 31 P3,200,000 June 30 3,000,000 What amount of rent income should be reflected in Lessor’s quarterly income statement for the three months ended June 30?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, Lessor Company signed a 1-year rental with quarterly payments of P100,000 due at the end of each quarter.  In addition, the lessee must pay contingent rent of 5% of all sales in excess of P10,000,000.  The contingent rent is paid in one payment on December 31.  The same lessee has used the building for the past 5 years, and in each of those years the lessee reached the contingent rent threshold of P10,000,000 in sales.  Sales of the lessee for the first two quarters are as follows:

 

Quarter ended

Amount

March 31

P3,200,000

June 30

  3,000,000

 

What amount of rent income should be reflected in Lessor’s quarterly income statement for the three months ended June 30?

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