Reference no: EM133182541

Question - JOJO Company has the following balances as of December 31, 2022:

Deferred Tax Assets P24,000

Deferred Tax Liabilities 18,000

Income Tax Payable 124,500

Income Tax Expense 147,500

Financial Income for CY 2022 amounted to P415,000. Upon the conduct of your audit, you have discovered the

following items related to income taxes:

a. Deferred Tax Asset is from the recognition of provision for inventory write-down that was recognized in CY 2021. Inventory at cost for the year then ended amounted to P850,000 while the lower of cost over NRV per class of inventory was P720,000.

b. Previously, doubtful accounts were directly written off from the books of accounts and were properly accounted for and reported to the BIR as valid deductible expense. However, starting CY 2022, the management has decided to recognize allowance for doubtful accounts based on aging of receivables. The amount of doubtful accounts per aging schedule amounted to P120,000 as of December 31, 2022 with no accounts written-off during the year.

c. Total collections on installment sales was P240,000 higher than the amount recognized in the financial income as it was expected to be realized in CY 2023. Per BIR regulations, the total collections for CY 2022 installment sales will be taxable on upon receipt of payment.

d. Deferred Tax Liability of P18,000 arose from difference in depreciation of a machinery that will be at the end of its useful life this CY 2022.

e. Financial income included penalties paid in the amount of P15,000 that is nondeductible per NIRC.

f. Nontaxable dividends for CY 2022 were received in the amount of P12,000.

g. Entry made to recognize taxes paid for the previous quarters included Dr. Income Tax Expense, P23,000 and Cr. Cash, P23,000

Required - How much is the Total Income Tax Expense for the CY 2022?

a. P124,500

b. P125,400

c. P230,400

d. P254,400