2. The balance in retained earnings at December 31, 2003 was P810,000 and at December 31, 2004 was P654,000. Net income for 2004 was P563,000. A stock dividend was declared and distributed which increased common stock P225,000 and paid-in capital P125,000. A cash dividend was declared and paid. The amount of the cash dividend was a. P279,000. c. P494,000. b. P369,000. d. P719,000. 3. On April 1, 2008, Ivy began operating a service proprietorship with an initial cash investment of P1,000. The proprietorship provided P3,200 of services in April and received full payment in May. The proprietorship incurred expenses of P1,500 in April which were paid in June. During May, Ivy drew P500 against her capital account. What was the proprietorship's income for the two months ended May 31, 2008, under the following methods of accounting? Cash basis Accrual basis a. 1,200 1,200 b. 1,700 1,700 c. 2,700 1,200 d. 3,200 1,700 4. Entity Co. uses the cash basis of accounting and reported income of P87,000 in 20x1. The following items were considered in the computation of the cash basis net income. Inventory, beginning Inventory, ending Receivables, beginning Receivables, ending Payables, beginning Payables, ending 12,000 18,000 40,000 38,000 19,000 25,000 The accrual basis income is a. 97,000 b. 73,000 c. 89,000 d. 85,000 5. Information on an entity's accounts is shown below: Current tax payable, beg. 150,000 Current tax payable, end. 400,000 Increase in deferred tax liability 60,000 Increase in deferred tax asset 20,000 Income tax paid 280,000 How much is the income tax expense for the period? a. 530,000 b. 540,000 c. 570,000 d. 610,000