PROBLEM: Tagaytay Company's summary of cash records show the following for the year 2022, its first year of operation: CASH Transactions Debit Credit Cash receipts 1,280,000 Cash Disbursements 825,000 455.000 December 31 balances You are contacted by the management to compute its net income using the accrual basis of accounting. During the process of preparation, the following were identified by you that will impact your computation: 1. Property, plant and equipment are depreciated on a straight line basis. Annual depreciation is P 105,000. 2. Prepaid insurance of P 18,000 was recognized as expense when it was paid. P 12,000 of the balance relates to year 2023. 3. The entire amount of P 120,000 which was received as advance rental for office space in its building was recognized as rent income when received. P 70,000 of the amount will be earned in 2023. 4. Employees are due P 28,000 at the end of 2022. 5. Uncollected interest from investment at the end of 2022 is P31.700. 6. It is estimated that your 2022 fee for accounting services that have not been billed will be P 5,000. QUESTIONS: 1. What is the net income under the cash basis of accounting for the year 2022? | Select) 2. What is the correct net income before income tax for 2022 by accrual accounting concepts?Select 3. What is the net effect of the errors in net income for 2023 using the accrual accounting concepts? Select
PROBLEM: Tagaytay Company's summary of cash records show the following for the year 2022, its first year of operation: CASH Transactions Debit Credit Cash receipts 1,280,000 Cash Disbursements 825,000 455.000 December 31 balances You are contacted by the management to compute its net income using the accrual basis of accounting. During the process of preparation, the following were identified by you that will impact your computation: 1. Property, plant and equipment are depreciated on a straight line basis. Annual depreciation is P 105,000. 2. Prepaid insurance of P 18,000 was recognized as expense when it was paid. P 12,000 of the balance relates to year 2023. 3. The entire amount of P 120,000 which was received as advance rental for office space in its building was recognized as rent income when received. P 70,000 of the amount will be earned in 2023. 4. Employees are due P 28,000 at the end of 2022. 5. Uncollected interest from investment at the end of 2022 is P31.700. 6. It is estimated that your 2022 fee for accounting services that have not been billed will be P 5,000. QUESTIONS: 1. What is the net income under the cash basis of accounting for the year 2022? | Select) 2. What is the correct net income before income tax for 2022 by accrual accounting concepts?Select 3. What is the net effect of the errors in net income for 2023 using the accrual accounting concepts? Select
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:PROBLEM:
Tagaytay Company's summary of cash records show the following for the year 2022, its first year of operation:
CASH
Transactions
Debit
Credit
Cash receipts
1,280,000
Cash Disbursements
825.000
December 31 balances
455.000
You are contacted by the management to compute its net income using the accrual basis of accounting. During the process of preparation, the following were
identified by you that will impact your computation:
1. Property, plant and equipment are depreciated on a straight line basis. Annual depreciation is P 105,000.
2. Prepaid insurance of P 18,000 was recognized as expense when it was paid. P 12,000 of the balance relates to year 2023.
3. The entire amount of P 120,000 which was received as advance rental for office space in its building was recognized as rent income when received. P 70,000 of
the amount will be earned in 2023.
4. Employees are due P 28,000 at the end of 2022.
5. Uncollected interest from investment at the end of 2022 is P 31.700.
6. It is estimated that your 2022 fee for accounting services that have not been billed will be P 5,000.
QUESTIONS:
1. What is the net income under the cash basis of accounting for the year 2022? Select
2. What is the correct net income before income tax for 2022 by accrual accounting concepts?Select
3. What is the net effect of the errors in net income for 2023 using the accrual accounting concepts? 1Select
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