On January 1, 2020, Juris Company leased a building to Jay Company for a ten-year term at an annual rental of P1,000,000. At inception of the lease, Juris received P4,000,000 covering the first two years rent and a security deposit of P2,000,000. This deposit will not be returned to Jay upon expiration of the lease but will be applied to payment of rent for the last two years of the lease.

1. What portion of the P4,000,000 should be reported as current liability on December 31, 2020? A. 0 B. 1,000,000 C. 2,000,000 D. 3,000,000

2. What portion of the P4,000,000 should be reported as non-current liability on December 31, 2020? A. 0 B. 2,000,000 C. 3,000,000 D. 4,000,000

On July 1, 2019, Herr Company leased a delivery truck from Bie Company under a 3-year operating lease. Total rent for the term of the lease will be P360,000 payable as follows: First 12 months @ P5,000 per month 60,000 Next 12 months @ P7,500 per month 90,000 Last 12 months @ P17,500 per month 210,000 All payments were made when due.

3. What is the rent revenue for the year ended June 30, 2020? A. 30,000 B. 50,000 C. 60,000 D. 120,000

4. On June 30, 2021, what amount should be reported as accrued rent receivable? A. 0 B. 90,000 C. 120,000 D. 210,000

Show solution