that are sold on the installment basis. payments are received for tax purposes. Rona Company started to manufacture in 2020 copy machines financial reporting purposes and P1,500,000 for tax purposes. for financial reporting purposes, and when installment Rona Company recognizes revenue when equipment is sold Koanancial reporting purposes, and when installment te 2020, the entity recognized gross profit of P6,000,000 for eancial reporting purposes and P1,500,000 for tax purposes. The amounts of gross profit expected to be recognized for tax purposes in 2021 and 2022 are P2,500,000 and P2,000,000, respectively. The entity guaranteed the copy machines for two years. Warranty costs are recognized on the accrual basis for financial reporting purposes and when paid for tax purposes. Warranty cost accrued in 2020 is P2,500,000 but only P500,000 of warranty cost is paid in 2020. It is expected that in 2021 and 2022, P1,000,000 and P1,000,000 respectively, of warranty cost will be paid. In addition during 2020, P500,000 interest, net of 20% final income tax, was received and earned. Insurance premium of P100,000 on life insurance policy that covered the life of entity's president was paid. The entity is the beneficiary for this policy. Pretax accounting income in 2020 was P2,000,000. Any 2020 operating loss will be carried forward to 2021. The tax rate is 30%.
that are sold on the installment basis. payments are received for tax purposes. Rona Company started to manufacture in 2020 copy machines financial reporting purposes and P1,500,000 for tax purposes. for financial reporting purposes, and when installment Rona Company recognizes revenue when equipment is sold Koanancial reporting purposes, and when installment te 2020, the entity recognized gross profit of P6,000,000 for eancial reporting purposes and P1,500,000 for tax purposes. The amounts of gross profit expected to be recognized for tax purposes in 2021 and 2022 are P2,500,000 and P2,000,000, respectively. The entity guaranteed the copy machines for two years. Warranty costs are recognized on the accrual basis for financial reporting purposes and when paid for tax purposes. Warranty cost accrued in 2020 is P2,500,000 but only P500,000 of warranty cost is paid in 2020. It is expected that in 2021 and 2022, P1,000,000 and P1,000,000 respectively, of warranty cost will be paid. In addition during 2020, P500,000 interest, net of 20% final income tax, was received and earned. Insurance premium of P100,000 on life insurance policy that covered the life of entity's president was paid. The entity is the beneficiary for this policy. Pretax accounting income in 2020 was P2,000,000. Any 2020 operating loss will be carried forward to 2021. The tax rate is 30%.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:that are sold on the installment basis.
Rona Company started to manufacture in 2020 copy machines
payments are received for tax purposes.
Rona Company recognizes revenue when equipment is sold
for financial reporting purposes, and when installment
financial reporting purposes and P1,500,000 for tax purposes.
Koanancial reporting purposes, and when installment
. 2020, the entity recognized gross profit of P6,000,000 for
Enancial reporting purposes and P1,500,000 for tax purposes.
The amounts of gross profit expected to be recognized for
tax purposes in 2021 and 2022 are P2,500,000 and P2,000,000,
respectively.
The entity guaranteed the copy machines for two years.
Warranty costs are recognized on the accrual basis for
financial reporting purposes and when paid for tax purposes.
Warranty cost accrued in 2020 is P2,500,000 but only P500,000
of warranty cost is paid in 2020.
It is expected that in 2021 and 2022, P1,000,000 and
P1,000,000 respectively, of warranty cost will be paid.
In addition during 2020, P500,000 interest, net of 20% final
income tax, was received and earned.
Insurance premium of P100,000 on life insurance policy that
covered the life of entity's president was paid. The entity is
the beneficiary for this policy.
Pretax accounting income in 2020 was P2,000,000. Any 2020
operating loss will be carried forward to 2021.
The tax rate is 30%.
Transcribed Image Text:What is the current tax expense for the current year?
a. 180,000
b. 600,000
c. 750,000
d.
What is the total tax expense for the current year?
a. 600,000
b. 630,000
c. 480,000
d.
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