Mr. George opened a janitorial services business called "George Johnny" on November 1, 20x1 and uses a calendar year. The following were the transactions during the year. 1. Mr. George made an investment of P100,000 to the business. 2. The total business permit and other licenses amounted to P4,800. 3. The business acquired janitorial equipment for P30,000 on account on November 1, 20x1. The equipment has a useful life of 5 years. 4. The business purchased supplies worth P60,000. The business uses the asset method in recording prepayments. 5. The business obtained a 12%, one-year, bank loan for PS0,000 on November 1, 20x1. Principal and interest are due at maturity date. 6. The business paid six months' rent in advance amounting to P9,000 on November 1, 20x1. 7. The business took one-year insurance for P6,000 on December 1, 20x1. 8. Total service fees billed to clients, on account, amounted to P400,000. 9. Total collections on accounts receivable amounted to P270,000. 10. Mr. George took P30,000 cash from the business.

Mr. George opened a janitorial services business called "George Johnny" on November 1, 20x1 and uses a calendar year. The following were the transactions during the year. 1. Mr. George made an investment of P100,000 to the business. 2. The total business permit and other licenses amounted to P4,800. 3. The business acquired janitorial equipment for P30,000 on account on November 1, 20x1. The equipment has a useful life of 5 years. 4. The business purchased supplies worth P60,000. The business uses the asset method in recording prepayments. 5. The business obtained a 12%, one-year, bank loan for PS0,000 on November 1, 20x1. Principal and interest are due at maturity date. 6. The business paid six months' rent in advance amounting to P9,000 on November 1, 20x1. 7. The business took one-year insurance for P6,000 on December 1, 20x1. 8. Total service fees billed to clients, on account, amounted to P400,000. 9. Total collections on accounts receivable amounted to P270,000. 10. Mr. George took P30,000 cash from the business.

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter3: Business Income And Expenses

Section: Chapter Questions

Problem 22MCQ

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Mr. George opened a janitorial services business called “George Johnny” on November 1, 20x1 and uses a calendar year. The following were the transactions during the year. Mr. George made an investment of P100,000 to the business. The total business permit and other licenses amounted to P4,800. The business acquired janitorial equipment for P30,000 on account on November 1, 20x1. The equipment has a useful life of 5 years. The business purchased supplies worth P60,000. The business uses the asset method in recording prepayments. The business obtained a 12%, one-year, bank loan for P50,000 on November 1, 20x1. Principal and interest are due at maturity date. The business paid six months’ rent in advance amounting to P9,000 on November 1, 20x1. The business took one-year insurance for P6,000 on December 1, 20x1. Total service fees billed to clients, on account, amounted to P400,000. Total collections on accounts receivable amounted to P270,000. Mr. George took P30,000 cash from the…
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