December 31 20x8 200,000 420,000 20x7 115,000 310,000 Assets Cash Installment accounts receivable Inventory Equipment – net of accumulated depreciation 180,000 125,000 480,000 360,000 Liabilities and Stockholders' Equity Accounts payable Unearned Rent 150,000 70,000 200,000 40,000 Estimated Warranties Obligation Other liabilities (including Deferred tax liability) Stockholders' equity You have satisfied yourself as to the accuracy of the balances shown above. In addition, the following information was 120,000 60,000 150,000 670,000 145,000 585,000 obtained: The Company's installment sales are taxable when cash is collected. • Spotify Company uses the straight-line method of depreciation for financial reporting purposes and sum of the years digit method for tax purposes. The equipment was acquired in January 20x7 and was estimated to have 5 year life. Rental income is taxable when cash is received. Warranty expense is deductible only when actual expenditure is made. Spotify Company reported a taxable income of P1,000,000 for 20x8.
December 31 20x8 200,000 420,000 20x7 115,000 310,000 Assets Cash Installment accounts receivable Inventory Equipment – net of accumulated depreciation 180,000 125,000 480,000 360,000 Liabilities and Stockholders' Equity Accounts payable Unearned Rent 150,000 70,000 200,000 40,000 Estimated Warranties Obligation Other liabilities (including Deferred tax liability) Stockholders' equity You have satisfied yourself as to the accuracy of the balances shown above. In addition, the following information was 120,000 60,000 150,000 670,000 145,000 585,000 obtained: The Company's installment sales are taxable when cash is collected. • Spotify Company uses the straight-line method of depreciation for financial reporting purposes and sum of the years digit method for tax purposes. The equipment was acquired in January 20x7 and was estimated to have 5 year life. Rental income is taxable when cash is received. Warranty expense is deductible only when actual expenditure is made. Spotify Company reported a taxable income of P1,000,000 for 20x8.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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