29. Matthew Company startedto manufacture in 2012copying machines that aresold on the installment basis.Matthew recognizes revenuewhen equipment is sold forfinancial reporting purposesand when installmentpayments are received for taxpurposes. In 2012, Matthewrecognized gross profit ofP10,000,000 for financialreporting purposes andP6,000,00 for tax purposes.The amounts of gross profitexpected to be recognized fortax purposes in 2013 and 2014is P2,000,000 each. Matthewguarantees the copyingmachines for two years.Warranty costs are recognizedon the accrual basis forfinancial accounting purposesand when paid for taxpurposes. Warranty expenseaccrued in 2012 is P2,800,000but only P1,000,000 of thewarranty cost was paid in2012. It is expected that in2013 and 2014, P1,100,000 andP700,000, respectively, ofwarranty costs will be paid. Inaddition, during 2012,P500,000 interest, net of 20%final income tax, was receivedand earned, and P200,000insurance premium on lifeinsurance policy that coveredthe life of Matthew Company'spresident was paid. Matthew isthe beneficiary of this policy.The tax rate has been 30%;accounting income in 2012was P5,000,000.AssumingMatthew has not made any taxpayments in 2012 yet, howmuch is its income taxpayable? *a. P750,000b. P840,000c. P930,000d. P1,410,000

Income tax:Income tax is based on income. Suppose a person has salary income, capital gain income,…

Answered: 29. Matthew Company started to…

29. Matthew Company started to manufacture in 2012 copying machines that are sold on the installment basis. Matthew recognizes revenue when equipment is sold for financial reporting purposes

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A8
Which of the following summaries the effect of the payment of cash to settle the warranty claim in year 2 on the elements of the financial statements
Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred: Feb. 28 Sold merchandise to Lennox, Inc., for $20,000 and accepted a 6%, 7-month note. 6% is an appropriate rate for this type of note. Mar. 31 Sold merchandise to Maddox Co. that had a fair value of $15,040, and accepted a noninterest-bearing note for which $16,000 payment is due on March 31, 2022. Apr. 3 Sold merchandise to Carr Co. for $14,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts. 11 Collected the entire amount due from Carr Co. 17 A customer returned merchandise costing $4,800. Evergreen reduced the customer’s receivable balance by $6,600, the sales price of the merchandise. Sales returns are recorded by the company as they occur. 30 Transferred receivables of $66,000 to a factor without recourse. The…
Lewes Company appropriately uses the installment sales method for tax purposes and the accrual method for revenue recognition for accounting purposes. Pertinent data at December 31, 2016, the close of the first year of operations, are as follows: Revenue Recognized Revenue Recognized Customer for Accounting Purposes for Tax Purposes Lowe's Builders $200,000 $100,000 Top Down Plumbing 500,000 350,000 Glass Plus Windows 600,000 350,000 Lewes's tax rate is 30%. What amount should be included in the deferred tax account at December 31, 2016 for these installment sales?
anhoe Corporation made credit sales of $18,600 which are subject to 7% sales tax. The corporation also made cash sales which taled $24,503 including the 7% sales tax. ) Prepare the entry to record Ivanhoe's credit sales. (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before Credit entries.) Account Titles and Explanation Accounts Receivable Debit 18600 Credit
5. MASAKIT SA BUNGO CORPORATION operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date. During 2019, the entity issued 50,000 award credits. The fair value of the award credits is reliably measured at P2,000,000. In 2019, the entity sold goods to customers for a total consideration of P9,000,000 including the fair value of the award credits. The total award credits expected to be redeemed are 80% in 2019 and 85% in 2020. The award credits actually redeemed are 15,000 in 2019 and 7,950 in 2020. What is the revenue earned from points in 202O? * a. P600,000 b. P750,000 c. P330,000 d. P318,000
am. 134.