At the beginning of the current year, Glasgow Company started business and issued share capital, 60,000 shares with P100 par, for the following considerations: Cash - P500,000; Building with useful life of 15 years - P4,500,000; and Land - P1,500,000.

An analysis of the bank statements showed total deposits, including the original cash investment, of P3,500,000.

The balance in the bank statement on December 31 was P250,000 but there were checks amounting to P50,000 dated in December but not paid by the bank until January of next year.

Cash on hand on December 31 was P125,000 including customers' deposit of P75,000.

During the year, the entity borrowed P500,000 from the bank and repaid P125,000 and P25,000 interest. The proceeds of the loan were credited to the bank account of the entity.

Disbursements paid in cash during the year were as follows: Utilities - P100,000; Salaries - P100,000; Supplies - P175,000; Taxes - P25,000; and Dividends - P150,000.

An inventory of merchandise taken on December 31 showed P755,000 of merchandise.

Tickets for accounts receivable totaled P900,000 but P50,000 of that may prove uncollectible. Unpaid suppliers invoices for merchandise amounted to P350,000.

Equipment with a cash price of P400,000 was purchased in early January on a one-year installment basis.

During the year, checks for the downpayment and all maturing installments totaled P445,000. the equipment has a useful life of 5 years.