Problem 3-1:Cash vs. Accrual Method

XYZ Inc. has the following receipts during 2019

From service billings to clientsP 200, 000

Advances from clients50,000

Total Cash Collection P250,000

The P 50,000 advances refer to services which will be rendered next year.Total uncollected billing increased from P50,000 on December 31, 2018 to P75, 000 on December 31, 2019.

1.The gross income using cash basis is

a.P200,000c. P250,000

b.P225,000d. P275,000

2.Using # 1 info , compute for the gross income using the accrual basis

a.P200,000c. P250,000

b.P225,000d. P275,000

Problem 3-2:Selling Price vs. Contract Price

RP purchased P250, 000 worth of real property and used the property as mortgage for a loan of P 300,000 payable in 10 equal installments.

After the first annual installment payment, RP sold the property to SR for P 350,000 with 10% cash down payment, balance payable into 2 equal instalments starting January of next year. SR assumed the remaining balance of the mortgage.

3.How much is the contract price?

a.P350, 000 c.P100,000

b.P270, 000d.P 80,000

Problem 3-3:Deferred Payment Method

On October 1, 2018 CJ sold a car costing P 1,000,000 payable as follows:

First year: CashP600, 000

Second Year: 12% interest bearing note400, 000

Third Year: 12% interest bearing note1,000,000

4.How much is the total reportable income in year 2018

a.P1,012,000c. P600,000

b.P1,000,000d. P12,000

Problem 3-4:Income from Construction Contracts

The contract price of the project is P 2,400,000.This was constructed as follows:

YearCost for the YearCompletion as of Year End

2017P 864,00060%

2018368,50085%

2019 207,500 100%

5.The income to be reported in year 2019 under percentage of completion method would be

a.P960, 000c. P 272,500

b.P807, 500d. P 152,500

Problem 3-5:Crop Basis

A dragon fruit farm reported the following:

Year Cost

Harvest

1P 50, 000P-0-

2100,000-0-

325,000250,000

425,000200,000

6.How much should be the amount of reportable income in year 3?

a.P 75, 000 c.P225, 000

b.P125, 000 d.P250, 000

Problem 3-6: Tax Compliance

A taxpayer filed his income tax return in October 28, 2019. The deadline for the return was April 15, 2019.If he has P80, 000 tax due

7.Compute the penalties in the form of interest

a.P5,156c. P 5,734

b.P5,222d. P 8,592

8.Compute for the surcharge

a.P 0c. P 20,000

b.P 16,000d. P 40,000

9.How much would be the total tax due inclusive of interest and surcharge but excluding compromise?

a.P 100,156c. P 125,156

b.P 125,734d. P 125,000