SAN SEBASTIAN COLLEGE RECOLETOS DE CAVITE

Income Taxation

Christopher C. Lim

The records of Asian Garden, a farm located in the midst of Mt Pinatubo showed the following
balances:
Sales of livestock & farm products raised
Rent Income from Machinery
Sales of livestock & farm products purchased
Selling Price of farm equipment
Book Value of Equipment
Proceeds of crop and livestock insurance
Cost of livestock & farm products purchased and sold
Inventory of livestock & farm products End
Cost of raising livestock & farm products
Inventory of livestock & farm products Beg

370,000.00
50,000.00
290,000.00
80,000.00
50,000.00
120,000.00
250,000.00
70,000.00
150,000.00
100,000.00

1. Compute for the Gross Income for the year ended December 31, 2005 under accrual
2. Compute for the Gross Income for the year ended December 31, 2005 under Cash
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Compute for the Gross Income for the year ended December 31, 20XX
Rental 1

Monthly Rental of P50,000

Real Property Tax for the year is P150,000, one-half is paid by the payee
Security Deposit of P75,000 (Contract has not been violated)

Rental 2

Annual Rental of 150,000

Leasehold Improvementmade by the lessee costing 100,000
Life of Improvement
10 years
Remaining Term of Lease
3 years

Rental 3

The lessee paid for the insurance premium of the house amounting to P180,000
The lessee repainted the house costing P120,000

Rental 4

The lessee paid the lessor with a second car with current market value P250,000
The lessor paid the remaining installment payment of the acquired car amounting
to P150,000

Rental 5

Rental P100,000
Advance Rental of 1P50,000
Security Deposit of P20,000 (violation has been committed)
Leasehold Improvement costing P2,000,000
Life of Leasehold Improvement is 10 years
Term of the lease is 5 years
a. Annual Method
b. Lump sum Method
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Vocal opened a barbershop. Its 1st year of operations showed the following (3 points each)
Gross Revenue:
Earned & Collected this year
150,000.00
Receivables End
90,000.00
Expenses:
Salary of Barber
50,000.00
Electricity Expense (Direct Cost of Service)
25,000.00
Depreciation of Equipment (Refrigerator)
3,500.00
Supplies used to render service
15,000.00
Rent of Shop (Direct Cost of Service)
30,000.00
Advertising Expense
12,500.00
Salary of Security Guard
30,000.00
1. Compute for Gross Income under cash method
2. Compute for Gross Income under accrual method